Interim Operations. 1 (a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to): (i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary; (ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary; (iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary; (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business; 1 Note to W&S: Subject to ongoing review by the Company. (v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options; (vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice; (vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award; (viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof); (ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule; (x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract; (xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP; (xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes; (xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000; (xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby; (xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders; (xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries; (xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary; (xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies; (xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits; (xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice; (xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or (xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a). (b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to): (i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers; (ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries; (iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary; (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 2 contracts
Sources: Merger Agreement (Superior Drilling Products, Inc.), Merger Agreement (Drilling Tools International Corp)
Interim Operations. 1
(a) The Company Each of the Partnership and Parent covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Effective Time (unless Parent or the termination of this AgreementPartnership, except (1) to the extent Parent as applicable, shall otherwise give its prior consent approve in writing (such consent which approval shall not to be unreasonably withheld, conditioned or delayed)), (2) and except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required contemplated by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; as provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments Contract in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing effect as of the date of this Agreement; , or (C) as security for any borrowings permitted required by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties applicable Law, the business of it and its Subsidiaries shall be conducted in the ordinary course Ordinary Course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates. Without limiting the generality of business and in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares furtherance of the Company’s or any Company Subsidiary’s capital stock or equity interestsforegoing, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement until the Effective Time, except as otherwise expressly: (i) contemplated by this Agreement; (ii) contemplated by any Contract entered into prior to, concurrently with or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything Agreement by Parent with respect to the contrary in this Section 4.1(a)(ixOther Parent Transactions (as such Contract may be amended, supplemented or otherwise modified from time to time), provide such Person with compensation and benefits for such position consistent with past practice; (3iii) hiring any Person for employment in accordance with required by applicable Law or the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term terms of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract(iv) as approved in writing (which approval shall not be unreasonably withheld, conditioned or delayed) by the other Party; or (v) set forth in the corresponding subsection of Section 8.1 of the Partnership Disclosure Letter, as it relates to the Partnership and its Subsidiaries, or on Section 8.1 of the Parent Disclosure Letter, as it relates to Parent and its Subsidiaries, each Party, on its own account, shall not and shall not permit its Subsidiaries to:
(i) make any material change to the nature of its business and operations;
(xiii) make any change to its Organizational Documents as in effect on the date of this Agreement in any manner that would reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of such Party to satisfy any of the conditions to, or the consummation of, the Merger or the other Transactions;
(iii) (A) merge or consolidate itself or any of its methods Subsidiaries with any other Person (expressly excluding, for the avoidance of financial accounting doubt, any of the Other Parent Transactions), or accounting practices (B) adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, in each case, except (1) such transactions solely between or among, or solely involving, such Party and one or more of its wholly owned Subsidiaries, or a Subsidiary of such Party and one or more wholly owned Subsidiaries of such Subsidiary, (2) as would not reasonably be expected to result in a Partnership Material Adverse Effect or Parent Material Adverse Effect, as applicable, or (3) as would not reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of such Party to satisfy any of the conditions to, or the consummation of, the Merger or the other Transactions;
(iv) issue, sell, grant, transfer or authorize the issuance, sale or grant, or otherwise enter into any Contract with respect to the voting of, any of its partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable (other than the issuance of partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, (A) by its wholly owned Subsidiary to it or another of its wholly owned Subsidiaries, (B) by the Partnership to the GP Delegate pursuant to the Partnership Agreement or (C) in respect of equity-based awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the plan documents as in effect on the date of this Agreement), or securities convertible or exchangeable into or exercisable for any such partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or any options, warrants or other rights of any kind to acquire any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or such convertible or exchangeable securities;
(v) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or securities convertible or exchangeable into or exercisable for any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable;
(vi) waive, release, assign, settle or compromise any claim, action or proceeding, including any state or federal regulatory proceeding seeking damages or injunction or other equitable relief, which waiver, release, assignment, settlement or compromise would reasonably be expected to result in a Partnership Material Adverse Effect or Parent Material Adverse Effect, as applicable;
(vii) other than in the Ordinary Course, make, change or revoke any material Tax election, adopt or change any material Tax accounting method, file any material amended Tax Return, settle any material Tax claim, audit, assessment or dispute for an amount materially in excess of the amount reserved or accrued on such Party’s most recent consolidated balance sheet included in the Parent Reports or Partnership Reports, as applicable, or surrender any right to claim a refund of a material amount of Taxes;
(viii) make any material changes with respect other than to accounting policies, except as required by changes in GAAP;
(xiiix) make (except for elections made or declare any dividends or distributions to the holders of Common Units or Parent Common Stock, in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, oreach case, other than in the ordinary course of businessOrdinary Course, agree subject to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied8.12; or
(xxiix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during Notwithstanding anything to the period from the date of this Agreement through the earlier of the Closing or the termination of contrary in this Agreement, except a Party’s obligations under Section 8.1(a) to take an action or not to take an action, or to cause its Subsidiaries to take an action or not to take an action, shall, with respect to any Persons (1and their respective Subsidiaries) controlled by such Party, or in which such Party otherwise has a voting interest, but that are not wholly owned Subsidiaries of such Party or have public equity holders, only apply (i) to the extent permitted by the Company shall otherwise give organizational documents and governance arrangements of such entity and its prior consent in writing (such consent not to be withheld, conditioned or delayed)subsidiaries, (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (Aii) to the extent the Company shall otherwise give a Party is authorized and empowered to bind such entity and its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (subsidiaries and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid permitted by any wholly owned Parent Subsidiary to Parent the Party’s or another wholly owned Parent Subsidiary;
its Subsidiaries’ duties (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture fiduciary or otherwise) (A) to such entity and its subsidiaries or any other Person, (B) any of its equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessholders.
Appears in 2 contracts
Sources: Merger Agreement (Enbridge Inc), Merger Agreement (Enbridge Energy Partners Lp)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing or the termination of Effective Time and except (A) as otherwise expressly required by this Agreement, except (1B) as required by applicable Laws, (C) as Parent may consent to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned delayed or delayed), conditioned) or (2D) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to protect and preserve in all material respects its assets and to preserve intact its business organizations and maintain existing relations and goodwill with Governmental Entities, customers, licensees, development collaboration or similar commercialization partners, manufacturers, suppliers, distributors, creditors, lessors, employees and other business associates and keep available the services of its and its Subsidiaries’ present employees and agents. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the Effective Time, except (3A) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required by this Agreement, the Company shall(B) as required by applicable Laws, and shall cause the Company Subsidiaries to, use commercially reasonable efforts (C) as Parent may consent to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned delayed or delayed), conditioned) or (BD) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents adopt or amend the Organizational Documents propose any change in its certificate of any Company Subsidiaryincorporation or by-laws or other applicable governing instruments;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineexcept for any such transactions among wholly owned Subsidiaries of the Company, subdivideor restructure, changereorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, exchangeoperations or businesses;
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of, amend individually or in the terms aggregate, $2,500,000, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber, or reclassify authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of the Company Subsidiaryto the Company or another wholly owned Subsidiary or the issuance of Shares pursuant to Company Options, Company Restricted Shares or the Convertible Senior Notes outstanding as of the date of this Agreement) or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiv) create or incur any Lien material to the Company or any of its Subsidiaries on any assets of the Company or any of its Subsidiaries;
(vi) other than pursuant to the terms of Contracts in effect as of the date of this Agreement and provided to Parent prior to the date of this Agreement, make any loans, advances, guarantees or capital contributions to or investments in any Person (other than investments in cash and cash equivalents and other investments that would constitute short-term investments on the balance sheet of the Company and other than in the Company or any direct or indirect wholly owned Subsidiary of the Company);
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for (A) dividends or distributions only to the extent paid by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company Subsidiary;
(iv) acquire (by mergerSubsidiary or regular quarterly dividends not to exceed $0.10 per Share, consolidationdeclared and paid consistent with prior timing, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, and (B) any equity interest cash dividends paid to the Company or one of its wholly-owned Subsidiaries by a wholly-owned Subsidiary of the Company) or enter into any agreement with respect to the voting of its capital stock;
(viii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock, except from (A) holders of Company Options in full or partial payment of the exercise thereof and/or any other Person applicable Taxes payable by such holder upon exercise of the Company Options or Company SARs or the lapse of restriction on Company Restricted Shares to the extent required or permitted under the terms of the applicable Stock Plans and award agreements or (other than investments B) former employees, directors or consultants following termination of their relationship with the Company in equity securities that constitute short term investments that are accounted accordance with applicable agreements providing for as cash equivalents), the repurchase of shares upon such termination;
(Cix) incur any business indebtedness for borrowed money or division guarantee such indebtedness of another Person, or (D) issue or sell any material assets except, (1) acquisitions by debt securities or warrants or other rights to acquire any debt security of the Company from or any wholly of its Subsidiaries, except for inter-company borrowings solely among the Company and its wholly-owned Company Subsidiary Subsidiaries or among any wholly the Company’s wholly-owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory Subsidiaries in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viix) directly or indirectly repurchase, redeem or otherwise acquire any shares except as set forth in the capital budgets set forth in Section 6.1(a)(x) of the Company’s Company Disclosure Schedule and consistent therewith, make or authorize any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible expenditure;
(currently or after the passage of time or the occurrence of certain eventsxi) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing enter into any Contract that would have been a Material Contract had it been entered into prior to the date of this Agreement; Agreement or (B) shares amend, modify or terminate any Material Contract, or cancel, modify or waive any debts, rights or claims thereunder; for purposes of Company Common Stock accepted as payment for this Section 6.1, the exercise price of Company Options or for withholding Taxes incurred monetary reference in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms clause (A) of the applicable awarddefinition of Material Contract shall be changed to $5,000,000; the monetary reference in clause (B) of the definition of Material Contract shall be changed to $2,500,000; the monetary reference in clause (C) of the definition of Material Contract shall be changed to $2,500,000; the monetary reference in clause (D) of the definition of Material Contract shall be changed to $2,500,000; and the monetary reference in the definition of Personal Property Leases shall be changed to $2,500,000;
(viiixii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans material changes with respect to accounting policies or capital contributions to any other Personprocedures, except for as required by changes in Law or applicable GAAP or statutory or regulatory accounting rules or interpretations with respect thereto;
(A) settle any indebtedness among litigation or other proceedings before a Governmental Entity except where the Company settlement is limited solely to (I) the release of claims and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees II) the monetary payment by the Company or any Subsidiary does not exceed $2,000,000 (or $15,000,000 in the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (Daggregate for all such settlements) or (EB) commence, join, make an appeal with respect to a lawsuit, action, claim or similar proceeding other than (I) for the routine collection of this Section 4.1(a)(ix)bills, (BII) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by such cases where the Company in good faith determines that failure to be required commence suit would result in the material impairment of a valuable aspect of its business, provided, that the Company consults with Parent prior to comply the filing or taking of any action with applicable Legal Requirements; respect to such lawsuit, action, claim or similar proceeding, or (2III) hiring any Person for employment (including by means of internal promotion) pursuant to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(xxiv) file or amend any material Tax Return except in the ordinary course of business, (i)(A) amend settle or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign compromise any material rights under any Material ContractsTax liability, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax electionelection except to the extent consistent with past practice or as required by law, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claimexcept as required by law, or take any action which would materially adversely affect the Tax position of the Company or of any of its Subsidiaries;
(xv) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any assets, licenses, operations, rights, product lines, businesses or interests therein of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except sales of Company Products in the ordinary course of business and sales of obsolete assets, other proceeding relating than pursuant to a material amount Contracts in effect prior to the date of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, this Agreement;
(xvi) other than in the ordinary course of business, agree (A) transfer, sell, license, mortgage, pledge, encumber, divest, cancel, abandon or allow to an lapse or expire or otherwise dispose of any Intellectual Property Rights, (B) grant, extend, amend or abandon (except as required in the diligent prosecution of Owned Intellectual Property), waive or modify any material rights in or to Owned Intellectual Property, (C) fail to diligently prosecute the Company’s and its Subsidiaries’ patent applications, or (D) fail to exercise a right of removal or extension or waiver of the statute of limitations with respect to a under any material amount of TaxesOwned Intellectual Property;
(xiiixvii) other than consignment except to make changes that are required by applicable Law or to satisfy contractual obligations existing as of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in date hereof pursuant to Contracts or Benefit Plans which are listed on Section 4.1(a)(xiii6.1(a)(xvii) of the Company Disclosure Schedule Schedule, (a “Non-Budgeted Capital Expenditure”)A) terminate, except enter into, amend or renew (or communicate any intention to take such action) any Benefit Plan, other than routine amendments to qualified retirement plans or health and welfare plans (other than severance plans) that do not increase benefits or result in materially increased administrative costs, (B) increase in any manner the compensation, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any of the current or former directors, officers, employees or consultants of the Company or its Subsidiaries, (C) pay any Company Subsidiary may make bonus or incentive compensation under any NonBenefit Plan in excess of the amount earned based on actual performance, (D) accelerate the vesting of or lapsing of restrictions with respect to any equity-Budgeted Capital Expenditure thatbased compensation or other long-term incentive compensation under any Benefit Plan, when added (E) grant any new award, amend the terms of outstanding awards or change the compensation opportunity under any Benefit Plan, (F) pay any severance in excess of what is legally required under the terms of any Benefit Plan or applicable Law, (G) take any action to all fund or secure the payment of any amounts under any Benefit Plan, (H) change any assumptions used to calculate funding or contribution obligations under any Benefit Plan, other Non-Budgeted Capital Expenditures than as required by GAAP, (I) hire any executive officer or any employee or consultant with maximum annual cash compensation opportunities in excess of $200,000, provided, that such new hire’s compensation and benefits are made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregateordinary course consistent with past practice and are consistent with the other requirements set forth in this Agreement, exceed (J) enter into any collective bargaining agreement or other agreement with a labor union, works council or similar organization or (K) terminate without cause the aggregate CapEx Budget by more than $100,000employment of any officer of the Company;
(xivxviii) except as expressly required by applicable Legal Requirements subject to Section 6.2, take any action or the Company’s Organizational Documentsomit to take any action that is reasonably likely to prevent, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent interfere with or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding Merger or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Merger set forth in ARTICLE V Article VII not being satisfied; or
(xxiixix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees thatPrior to making any formal written communications or group oral presentations to the directors, during the period from the date of this Agreement through the earlier officers or employees of the Closing Company or any of its Subsidiaries pertaining to compensation or benefit matters that are affected by the termination of transactions contemplated by this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing provide Parent with a copy of the intended communication, Parent shall have a reasonable period of time to review and comment on the communication (such consent which comments shall not to be withheld, conditioned unreasonably withheld or delayed), (2) as set forth in Section 4.1(b) of the and Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent cooperate in writing, providing any such mutually agreeable communication.
(Bc) as set forth in Subject to Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement6.5, Parent shall not (and shall not take or permit any Parent Subsidiary to):
(i) amend Parent’s of its Subsidiaries to take any action that is reasonably likely to prevent, interfere with or either delay the consummation of the Acquisition Subs’ Organizational Documents Merger or amend the Organizational Documents of any Parent Subsidiary result in any manner that would be adverse in any material respect of the conditions to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, Merger set aside, make or pay any dividend or other distribution (whether payable forth in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessArticle VII not being satisfied.
Appears in 2 contracts
Sources: Merger Agreement (Medicis Pharmaceutical Corp), Merger Agreement (Valeant Pharmaceuticals International, Inc.)
Interim Operations. 1
(a) The Company Debtor covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Closing, except (i) as otherwise expressly required or the termination of contemplated by this Agreement, except (1ii) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), (2iii) as otherwise required by applicable Laws or (iv) as set forth in Section 4.1(a) 4.1 of the Company Debtor Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shallBusiness shall be conducted in the ordinary and usual course and, to the extent consistent therewith, the Debtor and its Subsidiaries shall cause the Company Subsidiaries to, use their respective commercially reasonable efforts to conduct preserve their business organizations intact, preserve governmental licenses, permits, consents, approvals, authorizations and qualifications and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates, and keep available the services of its business and its Subsidiaries’ present employees and agents. Without limiting the generality of, and in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of furtherance of, the foregoing. During the period , from the date of this Agreement through until the earlier of the Closing Closing, except (i) as otherwise expressly required or the termination of contemplated by this Agreement, except (Aii) to the extent as Parent shall otherwise give its prior consent may approve in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned or delayed), (Biii) as otherwise required by applicable Laws or (iv) as set forth in Section 4.1(a) 4.1 of the Company Debtor Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementLetter, the Company shall Debtor will not (and shall will not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents adopt or amend the Organizational Documents propose any change in its certificate of any Company Subsidiaryincorporation or by-laws or other applicable governing instruments;
(ii) split, combine, subdivide, change, exchange, amend merge or consolidate the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company Debtor or any Company Subsidiaryof its Subsidiaries with any other Person, or restructure, reorganize or completely or partially liquidate the Debtor or any of its Subsidiaries or otherwise enter into any agreements providing for the sale of their respective material assets, operations or business (other than the sale or disposition of obsolete or worn-out assets in the ordinary course of business);
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $1,000,000 in any transaction or series of related transactions, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement which have been provided to Parent prior to the date of this Agreement;
(iv) acquire any corporation, partnership or other business organization or division thereof or collection of assets constituting all or substantially all of a business or business unit, whether by merger or consolidation, purchase of substantial assets or equity interest or any other manner, from any other Person;
(v) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of capital stock of the Debtor or any of its Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary of the Debtor to the Debtor or another wholly-owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(vi) create or incur any Lien securing indebtedness for borrowed money (other than a Lien currently provided for under the Centerbridge Facility, any Permitted Lien (other than clause (d) of such definition) and/or the grant of any cash collateral in respect of letters of credit issued in respect of, or otherwise securing, ordinary course operating liabilities) on any assets of the Debtor or any of its Subsidiaries having a value in excess of $1,000,000 in the aggregate;
(vii) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Debtor or any direct or indirect wholly-owned Subsidiary of the Debtor);
(viii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of its capital stock (except for dividends paid by any direct or indirect wholly-owned Subsidiary to the Company’s Debtor or to any other direct or indirect wholly-owned Subsidiary) or enter into any agreement with respect to the voting of its capital stock (other than the Restructuring Support Agreement);
(ix) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or the securities convertible or exchangeable into or exercisable for any shares of its capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiarystock;
(ivx) acquire incur any indebtedness for borrowed money (by mergerwhich, consolidationfor the avoidance of doubt, operation shall not include obligations in respect of lawcash-collateralized letters of credit issued in respect of, acquisition or other grants of stockcash collateral securing, other equity interests ordinary course operating liabilities) or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division guarantee such indebtedness of another Person, or (D) issue or sell any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary debt securities or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses warrants or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, acquire any shares debt security of its capital stock the Debtor or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice; practice (A) not to exceed $2,000,000 in the aggregate, (B) pursuant to written Contracts or commitments existing as guarantees incurred in compliance with this Section 4.1 by the Debtor of indebtedness of wholly-owned Subsidiaries of the date of this Agreement; Debtor or (C) as security for any borrowings permitted by Section 4.1(a)(viii); indebtedness owed to the Debtor or (D) licenses granted to customers or other third parties in another wholly-owned Subsidiary of the ordinary course of business in a manner consistent with past practiceDebtor;
(viixi) directly or indirectly repurchase, redeem or otherwise acquire any shares except as set forth in the capital expenditures budget set forth in Section 4.1(a)(xi) of the Company’s Debtor Disclosure Letter, make or authorize any Company Subsidiary’s capital stock or equity interestsexpenditure in excess of $2,000,000 in the aggregate, or excluding any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain eventscapital expenditure required by any Contract set forth on Section 4.1(a)(xi) into or exchangeable for any shares of the Company’s Debtor Disclosure Letter or any Company Subsidiary’s capital stock or equity interests, except: expenditure determined in good faith by the Debtor Board to be required for (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defeaseprotection of, or cancel to avoid injury to, any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, the care or accelerate the vesting or payment of, the compensation or benefits safety of any member patient under the care of any facility operated by the Company Board, current employee, or former employee of the Company Debtor or any Company Subsidiary, of its Subsidiaries or (C) grant compliance with Law;
(xii) enter into any rights Contract that would have been a Material Contract had it been entered into prior to severancethis Agreement;
(xiii) make any material changes with respect to material accounting policies or procedures, retention, change except as required by changes in control applicable Law or termination pay to GAAP;
(xiv) settle any member litigation or other Proceeding brought against the Debtor or its Subsidiaries by a Governmental Entity (A) for an amount in excess of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 individually or $1,000,000 in the aggregate for all such Proceedings (other than any resolution of claims processing for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except government reimbursement in the ordinary course of business, (i)(Aand excluding recoupment actions) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waivein a manner that would impose any restrictions on its assets, release operations or assign businesses or result in any injunction or equitable relief against the Debtor or any of its Subsidiaries;
(xv) settle any Proceeding other than against or brought by a Governmental Entity, (A) for an amount in excess of $500,000 individually or $8,000,000 in the aggregate for all such Proceedings in any one-calendar-month period (in each case, with respect to Proceedings in the state of Pennsylvania, net of applicable insurance proceeds) or (B) in a manner that would impose any restrictions on its assets, operations or businesses or result in any injunction or equitable relief against the Debtor or any of its Subsidiaries;
(xvi) amend, modify or terminate any Material Contract, including the Centerbridge Facility, in a manner adverse to the Debtor or its Subsidiaries;
(xvii) (A) change in any material rights under respect any Material Contracts, material method of accounting of the Debtor or its Subsidiaries for Tax purposes; (iiB) enter into any Contract agreement with any Governmental Entity (including a “closing agreement” under Code Section 7121) with respect to any material Tax or agreement that, if in effect on Tax Returns of the date Debtor or its Subsidiaries; (C) surrender a right of this Agreement, would constitute the Debtor or its Subsidiaries to a Material Contract;
material Tax refund; (xiD) change any an accounting period of the Debtor or its methods of financial accounting or accounting practices in Subsidiaries with respect to any material respect other than as required by changes in GAAP;
Tax; (xiiE) make file an amended Tax Return; (except for elections made in the ordinary course of business), F) change or revoke any material Tax election, change election with respect to Taxes; (G) make any material election with respect to Taxes that is inconsistent with past practice; (H) file any Tax accounting Return that is inconsistent with past practice; or (I) consent to any extension or waiver of the limitations period or material method of Tax accounting, amend applicable to any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle claim or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, assessment (other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes);
(xiiixviii) other than consignment transfer, sell, lease, license, mortgage, pledge, divest or otherwise dispose of Company Products in any material tangible or intangible assets (including Intellectual Property Rights), licenses, operations, rights, product lines, businesses or interests therein of the ordinary course of businessDebtor or its Subsidiaries, make any capital expenditure that is not contemplated by including the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) stock of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)any of its Subsidiaries, except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, services provided in the ordinary course of business in and sales or other dispositions of obsolete or worn-out assets and except for sales, leases, licenses, divestitures, cancellations, abandonments, lapses, expirations or other dispositions of assets with a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do fair market value not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage$500,000 in the aggregate, and (z) do not include an admission other than pursuant to Contracts in effect prior to the date of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policiesthis Agreement;
(xix) (A) enter into, adopt, amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or terminate any Company Plan (other than entry into any new employment agreement with any individual whose hiring is not restricted by, or who is otherwise hired in accordance with, clause (H) below), (B) terminate increase or allow accelerate the compensation, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any director, officer or employee of the Debtor or any of its Subsidiaries, (C) grant any new awards, or amend or modify the terms of any outstanding awards, under any Company Plan (other than grants of any new awards to lapse any material individual whose hiring is not restricted by, or who is otherwise hired in accordance with, clause (H) below), (D) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Permits;
Plan, (xxE) (A) fail change any actuarial or other assumptions used to pay any issuance, renewal, maintenance and other payments that become due calculate funding obligations with respect to any material Company Registered IP Plan that is required by applicable Law to be funded or otherwise abandonchange the manner in which contributions to such plans are made or the basis on which such contributions are determined, cancelexcept as may be required by the terms of any existing Company Plan set forth on Section 2.1(h)(i) of the Debtor Disclosure Letter or GAAP, (F) forgive any loans or permit to lapse issue any material Company Registered IP, loans (other than routine travel advances issued in the ordinary course of business) to any director, officer or employee of the Debtor or any of its Subsidiaries, (G) terminate the employment of any officer of the Debtor or its Subsidiaries other than for “cause”, (H) hire (x) any officer of the Debtor or its Subsidiaries with a title of Vice President or higher or (y) any employee of the Debtor or its Subsidiaries with aggregate annual base salary and target bonus of more than $250,000, except, in the case of the foregoing clauses (x) and (y), to the extent jointly determined by the Chief Restructuring Officer of the Debtor (“CRO”) and the Debtor Board in their reasonable business judgment in good faith necessary in the interests of patient care (any such individual described in the foregoing clauses (x) and (y) and hired to replace any such employee, a “New Hire”), provided that (i) any such officer New Hire (and his or her terms and conditions of employment, including any base and target incentive compensation) hired pursuant to this clause (H) shall be reasonably acceptable to Parent and (ii) the terms and conditions of employment of any New Hire that is not an officer, including base and target incentive compensation, shall be subject to notice and consultation with Parent, or (I) make any incentive payment or payment in respect of severance or any nonqualified deferred compensation entitlement to any current or former director, officer or employee of the Debtor or its Subsidiaries (including making any payments to any rabbi trust or taking any action that would cause the trustee of any rabbi trust to make payments to any current or former director, officer or employee of the Debtor or its Subsidiaries), except, with respect to clause (I) payment of any nondiscretionary incentive payments under existing Company Plans, nondiscretionary severance payments under existing Company Plans, and nondiscretionary payments of nonqualified deferred compensation (other than as set forth on Section 4.1(a)(xix)(I) of the Debtor Disclosure Letter) or as otherwise required by applicable Law; provided that payment in respect of any severance or nonqualified deferred compensation amount in excess of $200,000 shall be subject to prior notice and consultation with Parent and, with respect to clauses (A) through (H) above,
(1) amendments to welfare plans in the ordinary course of business, consistent with past practices that do not materially increase the costs of such welfare plans, (2) with respect to any hourly employees and salaried facility-level employees of the Debtor or its Subsidiaries, and any other employees of the Debtor or its Subsidiaries whose annual base salary does not exceed $150,000, increases in compensation in the ordinary course materially consistent with the Debtor’s 2018 operating budget or otherwise as reasonably determined by the CRO, in consultation with the QCP Consultants, to be necessary to respond to market demand, (3) with respect to each other employee of the Debtor or its Subsidiaries whose annual base salary exceeds $150,000 (other than any Eligible Employee), increases in compensation in the ordinary course of business in a manner consistent with past practicepractice that do not exceed 1.5% of the aggregate annual base salaries of such other employees or 7.5% of the annual base salary for any individual and (4) as required pursuant to existing Company Plans, or as otherwise required by applicable Law;
(Bxx) authorize the disclosure to become a party to, establish, adopt, amend, commence participation in or terminate any third party of any material Trade Secret included in the Company IP in collective bargaining agreement or other agreement with a way that results in loss of trade secret protectionlabor union, other than in the ordinary course of business in a manner consistent with past practiceworks council or similar organization;
(xxi) take enter into any Contract adversely affecting in any material respect the Debtor’s or cause any of its Subsidiaries’ ability to be taken use or otherwise exploit any action, or knowingly material Intellectual Property Rights;
(xxii) fail to take or cause use commercially reasonable efforts to be taken any action, which action or failure to act would reasonably be expected to (A) prevent keep in full force the Merger from qualifying material Insurance Policies under substantially the same levels of coverage as a reorganization within the meaning of Section 368(a) current policies of the Code or Debtor and its Subsidiaries;
(Bxxiii) result change in any material respect any of the conditions Debtor’s or its Subsidiaries’ material policies or procedures for or timing of the collection of accounts receivable (or any other trade receivables), payment of accounts payable (or any other trade payables), billing of its customers, pricing and payment terms, cash collections, cash payments or terms with suppliers, in each case, other than changes required by suppliers, vendors and service providers;
(xxiv) dismiss the QCP Consultants other than in accordance with Section 5.1(b);
(xxv) modify or amend in any respect any Contract pursuant to which HCR III or any of its Subsidiaries currently subleases real property to any other Subsidiary of the Mergers set forth in ARTICLE V not being satisfiedDebtor; or
(xxiixxvi) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during shall not knowingly take or permit any of its Subsidiaries to take any action that is reasonably likely to prevent or materially impede the period from the date of this Agreement through the earlier consummation of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessTransactions.
Appears in 2 contracts
Sources: Plan Sponsor Agreement, Plan Sponsor Agreement (Quality Care Properties, Inc.)
Interim Operations. 1
(a) The Company agrees thatshall, during the period and shall cause each of its Subsidiaries to, from and after the date of this Agreement through hereof until the earlier of the Closing and the termination of this Agreement (unless Purchaser shall otherwise approve in writing), and except as otherwise expressly required by this Agreement or as required by a Governmental Entity or applicable Law, conduct its business in the ordinary course and, to the extent consistent therewith, shall use and cause each of its Subsidiaries to use their respective commercially reasonable efforts to maintain its and its Subsidiaries’ relations and goodwill with Governmental Entities, clients, suppliers, licensors, licensees, distributors, creditors, lessors, employees and agents.
(b) Without limiting the generality of and in furtherance of the foregoing sentence, from and after the date hereof until the earlier of the Closing and the termination of this Agreement, except (1) as otherwise expressly required by this Agreement, required by a Governmental Entity or applicable Law, expressly required by the terms of any Company Material Contract in effect prior to the extent Parent shall otherwise give its prior consent date of this Agreement (correct and complete copies of which have been made available to Purchaser) or entered into following the date of this Agreement in accordance with the terms of this Section 3.1, as approved in writing by Purchaser (such consent approval not to be unreasonably withheld, conditioned or delayed), (2) as or set forth in Section 4.1(a3.1(b) of the Company Disclosure Schedule, the Company shall not and shall cause its Subsidiaries not to:
(1) adopt or propose any change in its Organizational Documents (other than to correct scrivener’s errors or immaterial or ministerial amendments);
(2) merge or consolidate with any other person, except for any such transactions solely among wholly owned Subsidiaries of the Company or in connection with any acquisition permitted by clause (3) as may be required by applicable Legal Requirementsbelow, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material restrictions on its properties, assets, operations or businesses;
(43) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in acquire assets or equity interests outside of the ordinary course of businessbusiness from any other person with a value or purchase price in the aggregate in excess of $10,000,000; provided provided, however, that the Company shall provide notification to Purchaser in the event that the Company or any action expressly permitted by of its Subsidiaries acquires assets or equity interests outside of the remaining provisions ordinary course of this Section 4.1(abusiness from any other person with a value or purchase price in the aggregate in excess of $1,000,000;
(4) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or otherwise enter into any contract or other agreement, understanding or arrangement (including Section 4.1(awhether oral or written) with respect to the voting of, any shares of capital stock of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company any of its Subsidiaries, securities convertible or exchangeable into or exercisable for any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any such shares of the Company’s capital stock or the capital stock or other equity interest interests, or any options, warrants or other rights of any Company Subsidiarykind to acquire any such shares of capital stock, other equity interests or such convertible or exchangeable securities (other than dividends (A) the issuance of shares of such capital stock, other equity securities or distributions only to the extent paid convertible or exchangeable securities (I) by any a wholly owned Subsidiary of the Company Subsidiary to the Company or another wholly owned Subsidiary of the Company, (II) to the Other Investor (provided that notice shall be provided to Purchaser of any such issuance no less than five business days prior to such issuance), (III) pursuant to any present employee, director or consultant benefit plan or program of or assumed by the Company Subsidiaryor any of its Subsidiaries or any present employee agreements or arrangements or programs, including the issuance of performance shares, restricted shares, options or similar securities in an aggregate amount and on the terms separately disclosed to Purchaser on February 20, 2024, (IV) in connection with any acquisition permitted by clause (3) above, or (V) in connection with any earn-out, deferred or contingent payment obligations required by the terms of any acquisition contract in effect prior to the date of this Agreement or entered into following the date of this Agreement in accordance with the terms of this Section 3.1 or (B) proxies or voting agreements solicited by or on behalf of the Company in connection with the 20% Approval);
(iv5) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by mergeror offer to redeem, consolidationpurchase or otherwise acquire, operation directly or indirectly, any of law, acquisition of its capital stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) in each case except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets tax withholding obligations of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii6) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries money in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) excess of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, 10,000,000 in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene for (A) any special meeting indebtedness in replacement of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except existing indebtedness for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner borrowed money on terms substantially consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material more favorable to the Company and than the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessindebtedness being replaced,
Appears in 2 contracts
Sources: Investment Agreement (AlTi Global, Inc.), Investment Agreement (AlTi Global, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through until the earlier of the Closing Acceptance Date (or the until termination of this Agreement, except Agreement in accordance with Article 7 hereof (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv“Termination Date”), (vi), (viii), (ix), (x), (xii), (xiii), and except (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (Ci) as may be required by applicable Legal RequirementsLaw, (ii) as may be agreed in writing by Parent (which consent, or lack thereof, may not be unreasonably delayed), (Diii) as expressly may be required by this AgreementAgreement or (iv) as set forth in Section 5.1 of the Company Disclosure Schedule, the Company covenants and agrees with Parent that (A) the business of the Company and its Subsidiaries shall not be conducted in the ordinary course and consistent with past practice, and, to the extent consistent therewith, the Company and its Subsidiaries shall use their commercially reasonable efforts to preserve intact their current business organizations, to keep available the services of their current officers and key employees, and to preserve their relationships with material customers, suppliers, licensors, licensees, advertisers, distributors and other third parties having business dealings with them, and to preserve in all material respects the goodwill of their respective businesses; provided, however, that no action by the Company or any of its Subsidiaries with respect to matters addressed specifically by any specific provision of clause (B) of this Section 5.1 shall be deemed a breach of this clause (A) of Section 5.1 unless such action would constitute a breach of such specific provision of clause (B), and (B) the Company shall not, and (as applicable) shall not permit any Company Subsidiary of its Subsidiaries to)::
(a) (i) amend authorize for issuance, issue, deliver, sell, or agree to issue, deliver or sell, or pledge or otherwise encumber, any shares of capital stock or any other securities convertible into, or any rights, warrants or options to acquire, any such shares, except for issuances of Shares upon the Company’s Organizational Documents exercise of Options outstanding as of the date of this Agreement or amend purchase rights under the Organizational Documents of any Company Subsidiary;
ESPP, or (ii) splitrepurchase, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant redeem or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares except for the repurchase of Company Common Shares in connection with the vesting of Restricted Shares under, and in accordance with the terms of, the Stock issuable upon exercise of outstanding Company OptionsOption Plans and the agreements executed thereunder;
(vib) (i) sell, transfer or pledge, or agree to sell, transfer or pledge, any equity interest owned by it, (ii) alter through merger, liquidation, reorganization, restructuring or in any other fashion its corporate structure or ownership, (iii) amend or otherwise change the Company Certificate or Company Bylaws or the certificate of incorporation, bylaws or equivalent organizational documents of any Subsidiary, or (iv) split, combine or reclassify any shares of its capital stock;
(c) declare, set aside or pay any dividends on (whether in cash, stock or property), or make any other distributions in respect of, any of its capital stock, except for dividends paid by direct or indirect wholly owned Subsidiaries to the Company or another of its wholly owned Subsidiaries with respect to capital stock;
(d) (i) grant or agree to any material increase in the compensation or fringe benefits of, or pay any bonus to or enter into any new employment, severance or termination agreement, or amend any existing employment, severance or termination agreement with any current or former director, officer or employee except for (A) increases in compensation and payment of bonuses expressly required under employment agreements, bonus plans and other Company Plans, agreements and arrangements existing as of the date of this Agreement, (B) ordinary course raises granted to non-officer employees in connection with regularly scheduled performance reviews and (C) entering into offer letters with newly-hired non-officer employees, the terms and conditions of which shall be substantially similar to the terms and conditions of the forms previously provided to Parent and Purchaser, and which shall not provide for a term of employment or severance payments (other than those generally made pursuant to applicable Company policy, if any); (ii) become obligated under any transaction between employee benefit plan that was not in existence on the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third partydate hereof, or incur amend, modify or terminate any Lien Company employee benefit plan or any agreement, arrangement, plan or policy for the benefit of any current or former director, officer or employee in existence on any of its material tangible property or tangible assetsthe date hereof, except for Company Permitted Encumbrancesas required by Law or the terms of any such plan; or (iii) pay any benefit not required by any plan or arrangement as in effect as of the date of this Agreement (including, without limitation, the granting of, acceleration of, exercisability of or vesting of stock options, stock appreciation rights or restricted stock, except as otherwise required or permitted by the terms of this Agreement);
(e) acquire or agree to acquire, including, without limitation, by merging or consolidating with, or otherwise dispose of (by merger, consolidation, operation of law, division purchasing all or otherwise)substantially all the assets or capital stock or other equity interests of, any material Company IP business or material tangible assets of the Companyany corporation, limited liability company, partnership or other business organization, other than: (A) sales than purchases of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; practice and not in excess of $100,000;
(Bf) pursuant sell, lease, license, mortgage or otherwise encumber or subject to written Contracts any lien or commitments existing as otherwise dispose of, or agree to sell, lease, license, mortgage or otherwise encumber or subject to any lien or otherwise dispose of, any of its properties or assets other than (i) properties or assets not in excess of $100,000 in one instance or $200,000 in the date of this Agreement; or aggregate, (Cii) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
, (viiiii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company non-exclusive trademark and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees logo licenses granted by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than partners for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President marketing purposes in the ordinary course of business in and that have a manner consistent with past practiceterm of one year or less remaining or that are terminable without penalty upon 60 days or less notice; (4iv) increases in compensation or benefits required pursuant to any nonexclusive licenses granted by the Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business to customers for such customers’ use of the Company’s products and services, (v) liens relating to Taxes that are not yet due and payable or otherwise being contested in a manner consistent good faith and as to which appropriate reserves have been established by the Company in accordance with past practice; GAAP, and (6vi) any other actions set forth in Section 4.1(a)(ix) liens of the Company Disclosure Schedule;
(x) except landlords, carriers, warehousemen, mechanics and materialmen that are incurred in the ordinary course of business, in each instance for amounts not yet due and payable;
(i)(Ag) amend incur, assume or pre-pay any indebtedness for borrowed money or enter into any agreement to incur, assume or pre-pay any indebtedness for borrowed money, except for (i) payments required or permitted and the incurrence of indebtedness in the ordinary course of business consistent with past practice, and (ii) financing of capital expenditures in the ordinary course of business and not in excess of $50,000;
(h) make or forgive any loans, advances or capital contributions to, guarantees for the benefit of, or investments in, any party, other than loans between or among the Company and any of its Subsidiaries and cash advances to the Company’s or any such Subsidiary’s employees for reimbursable travel and other business expenses incurred in the ordinary course of business consistent with past practice and guarantees made by the Company of the obligations of any of its Subsidiaries for the benefit of such Subsidiary;
(i) assume, guarantee or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any person other than the Company and its Subsidiaries, enter into any “keep well” or other agreement to maintain any financial statement condition of any person other than the Company and its Subsidiaries, or enter into any arrangement having the economic effect of any of the foregoing;
(j) fail to maintain insurance covering risks of such types and in such amounts as are consistent with the Company’s past practices, or cancel or terminate any material insurance policy that names the Company as beneficiary or loss payable payee;
(except for terminations pursuant to the expiration of the existing term of any Material Contractk) establish or acquire (i) any Material Contract or (B) waive, release or assign any material rights under any Material ContractsSubsidiary other than wholly-owned Subsidiaries, or (ii) Subsidiaries organized outside of the United States and its territorial possessions;
(l) amend, modify or waive any term of any of its outstanding securities;
(m) enter into any Contract labor or collective bargaining agreement, memorandum or understanding, grievance settlement or any other agreement thator commitment to or relating to any labor union, if in effect on the date of this Agreement, would constitute a Material Contractexcept as required by Law;
(xin) change settle or compromise any of its methods of financial accounting pending or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (threatened suit, action, claim or litigation, except for elections made in the ordinary course of businessbusiness and where such settlement or compromise would result in payments (individually and not in the aggregate), change or revoke any material Tax electionnet of insurance, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more less than $100,000;
(xivo) change any of the material accounting policies, practices or procedures (including material Tax accounting policies, practices and procedures) used by the Company and its Subsidiaries as of the date hereof, except as expressly may be required as a result of a change in applicable Law or in GAAP;
(p) make or change any material tax election, make or change any material method of accounting with respect to Taxes or compromise any material Tax liability or file any material amended Tax Return, except in each case as required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebyLaw;
(xvq) enter into pay, discharge or satisfy any agreementclaims, understanding liabilities or arrangement with respect to the voting of any capital stock obligations (absolute, accrued, asserted or other equity interests of the Company (including any voting trustunasserted, contingent or otherwise), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, satisfaction in the ordinary course of business in a manner and consistent with past practice, practice of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part financial statements of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or incurred in the ordinary course of business in a manner and consistent with past practice, or payments otherwise expressly permitted by the terms of this Agreement;
(Br) authorize the disclosure transfer or license to any third party any Company Intellectual Property (other than pursuant to a contract in effect as of the date of this Agreement), or amend or modify any material Trade Secret included contract in effect as of the date of this Agreement and relating to Company IP in a way that results in loss of trade secret protectionIntellectual Property, other than the grant in the ordinary course of business of non-exclusive trademark and logo licenses that have a term of one year or less remaining or that are terminable without penalty upon 60 days or less notice and that are granted by the Company to partners for marketing purposes, and other than non-exclusive licenses to customers in a manner consistent connection with past practice;the provision of the Company’s or its Subsidiaries’ services; and
(xxis) take agree or cause commit to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in do any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 2 contracts
Sources: Merger Agreement (Best Buy Co Inc), Merger Agreement (Napster Inc)
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through until the earlier of the Closing or the termination of this AgreementEffective Time, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(aSECTION 5.2(a) of the Company Disclosure ScheduleOF THE COMPANY DISCLOSURE LETTER, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreementunless Parent has consented in writing thereto, the Company shall, and shall cause the Company its Subsidiaries to, :
(i) conduct its operations according to its ordinary course of business consistent with past practice and in compliance in all material respects with all applicable Laws; (ii) use its commercially reasonable efforts to conduct preserve intact its business organizations and goodwill, keep available the services of its officers, employees and consultants, and maintain satisfactory relationships with those Persons having business relationships with them; (iii) upon the discovery thereof, promptly notify Parent of the existence of any breach of any representation or warranty contained herein (or, in the ordinary course case of businessany representation or warranty that makes no reference to Company Material Adverse Effect or materiality, any breach of such representation or warranty in any material respect) or the occurrence of any event that would cause any representation or warranty contained herein no longer to be true and correct (or, in the case of any representation or warranty that makes no reference to Company Material Adverse Effect or materiality, to no longer be true and correct in any material respect); provided that (iv) promptly deliver to Parent true and correct copies of any action expressly permitted by report, statement or schedule filed with the remaining provisions SEC subsequent to the date of this Section 4.1(aAgreement; and (v) pay its Taxes when due.
(including Section 4.1(ab) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from From and after the date of this Agreement through until the earlier of the Closing or the termination of this AgreementEffective Time, except (Aas set forth in SECTION 5.2(b) to the extent OF THE COMPANY DISCLOSURE LETTER, unless Parent shall otherwise give its prior consent has consented in writing thereto (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such which consent shall not to be unreasonably withheld, conditioned withheld or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (not, and shall cause its Subsidiaries not permit any Company Subsidiary to):
: (i) amend the Company’s Organizational Documents its Certificate of Incorporation or amend the Organizational Documents of any Company Subsidiary;
By- Laws; (ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiariesoffer, issue, sell, grant sell or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, pledge any shares of its capital stock or other equity interestsownership interest in the Company or its Subsidiaries, or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest, or convertible or exchangeable securities; (iii) effect any stock split or otherwise change its capitalization as it exists on the date hereof; (iv) grant, confer or award any option, warrant, convertible security or other right to acquire any shares of its or its Subsidiaries' capital stock; (v) declare, set aside or pay any dividend or make any other distribution or payment with respect to any shares of its capital stock or other ownership interests (other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
such payments by the Subsidiaries to the Company); (vi) except in connection with directly or indirectly redeem, purchase or otherwise acquire any transaction between shares of its capital stock or capital stock of its Subsidiaries or any securities that are convertible into or exchangeable for any shares of capital stock of, or other equity interests in, or any outstanding options, warrants or rights of any kind to acquire any shares of capital stock of, or other equity interests in, the Company and or any wholly owned Company Subsidiary or among any wholly owned Company of its Subsidiaries, ; (vii) sell, assignlease, license, mortgage, pledge, encumber, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, exchange or otherwise dispose of any of its properties or assets, whether tangible or intangible (by merger, consolidation, operation including capital stock of law, division or otherwiseits Subsidiaries), any material Company IP other than the sale or material tangible assets disposition of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets inventory in the ordinary course of business consistent with past practicepractice or the sale, lease or other disposition of assets which individually or in the aggregate, are obsolete or not material to the Company and its Subsidiaries taken as a whole; (Bviii) pursuant acquire by merger or consolidation with, by purchase of any equity interest of or by any other manner, any business or entity or otherwise acquire any assets which would be material, individually or in the aggregate, to written Contracts the Company and its Subsidiaries taken as a whole, except for purchases of inventory, supplies or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties capital equipment in the ordinary course of business and except for the acquisition of any business, entity or assets not having aggregate individual consideration greater than $50,000 or aggregate consideration greater than $100,000; (ix) incur or assume any long-term or short-term debt, except for working capital purposes and the purchase of capital equipment in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares the ordinary course of business under the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events's existing credit agreements set forth in Section 5.2(b) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this AgreementDisclosure Letter; or (Bx) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed moneyassume, guarantee any such indebtedness, issue or sell any debt securities otherwise become liable or rights to acquire any debt securities responsible (whether directly, contingently or otherwise) for the obligations of any other Person except its Subsidiaries; (xi) make or make forgive any loans loans, advances or capital contributions to continuations to, or investments in, any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (Person other than for cause); except, in each case, for: (1) amendments loans and advances to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President officers or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except employees in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant not to exceed $100,000 in the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
aggregate; (xii) make increase the compensation (or benefits) payable to or to become payable to any director, officer or other employee, except for elections made increases in salary or wages of non-officer employees in the ordinary course of business)business and consistent with past practice; (xiii) establish, change adopt, enter into, materially amend, or revoke take any material Tax electionaction to accelerate any rights or benefits under any collective bargaining agreement or any Plan; (xiv) effect any reorganization or recapitalization; (xv) pay, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilitydischarge, settle or compromise satisfy any material liability for Taxes claims, liabilities, obligations or any Tax auditlitigation (absolute, claimaccrued, asserted or other proceeding relating to a material amount unasserted, contingent or otherwise) in excess of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result $250,000 individually and $500,000 in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, orthe aggregate, other than the payment, discharge, settlement or satisfaction in the ordinary course of business or in accordance with their terms, of liabilities disclosed, reflected or reserved against in the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company SEC Reports or incurred since the date of such financial statements in the ordinary course of business, agree to an extension or waiver cancel any indebtedness in excess of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company $10,000 individually and the Company Subsidiaries since the date of this Agreement would not, $50,000 in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
; (xivxvi) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) take any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal action that would reasonably be expected to impairto: (A) prevent, prevent impair or materially delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting ability of the Company’s shareholders;
(xvi) adopt a plan of (A) complete , Parent or partial liquidation of Merger Sub to consummate the Company or any Company Subsidiary Merger or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V consummation of the Merger not being to be satisfied; or
(xxiixvii) authorizemake or change any Tax election, approve or file any amended Tax Return, enter into any agreement closing agreement, settle or make compromise any commitment liability with respect to Taxes, agree to any material adjustment of any Tax attribute, file any claim for a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment; or (xviii) agree in writing or otherwise to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing actions.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 2 contracts
Sources: Merger Agreement (Integrated Defense Technologies Inc), Merger Agreement (Integrated Defense Technologies Inc)
Interim Operations. 1
(a) The Company covenants and agrees that, during the period from after the date of hereof and prior to the Effective Time, except as expressly contemplated or permitted by this Agreement through or required by applicable Law or with the earlier prior written approval of the Closing or the termination of this Agreement, except Parent (1) to the extent Parent which shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted course. To the extent consistent with the foregoing and except as otherwise consented to by the remaining provisions of this Section 4.1(a) Parent (including Section 4.1(a) of which consent shall not be unreasonably withheld, delayed or conditioned), the Company Disclosure Schedule) will not constitute and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, and other Persons with whom the Company or its Subsidiaries has a violation material business relationship. Without limiting the generality of the foregoing. During the period , from the date of this Agreement through until the earlier of the Closing Effective Time, except (w) as otherwise expressly contemplated or the termination of permitted by this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), ) with the prior written approval of Parent (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned delayed or delayedconditioned), (By) as required by applicable Law or (z) as set forth in Section 4.1(a5.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall will not (and shall will not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents its certificate of incorporation or amend the Organizational Documents of any Company Subsidiaryby-laws or other applicable governing instruments;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person;
(iii) make any acquisition (whether by merger, combineconsolidation, subdivideor acquisition of stock or assets) of any interest in any Person or any division or assets thereof other than (A) acquisitions in the ordinary course of business with a value or purchase price in the aggregate not in excess of $2,000,000 in any transaction or series of related transactions, changeor (B) acquisitions pursuant to Contracts in effect as of the date of this Agreement, exchangetrue and complete copies of which have been made available to Parent;
(iv) issue, amend the terms sell, pledge, grant, transfer, encumber or otherwise dispose of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of the Company Subsidiaryor any of its Subsidiaries (other than (A) the issuance of shares of Class A Common Stock upon the settlement of Company Options or Company Restricted Stock Awards, (B) in satisfaction of obligations pursuant to Contracts or Plans existing as of the date hereof, (C) by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company, (D) the issuance of equity awards permitted by clause (xii) below or (E) the issuance of shares of Class A Common Stock pursuant to the terms of an ESPP offering permitted under Section 2.8(c));
(iiiv) make any loans, advances (other than pursuant to Government Contracts in the ordinary course of business) or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company) in excess of $2,000,000 in the aggregate;
(vi) declare, set aside, establish a record date for, make or pay any dividend or other distribution (whether payable in cash, stock stock, property or propertyotherwise) with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary);
(ivvii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, other than the acquisition of stockany shares of Class A Common Stock tendered by current or former employees or directors in order to pay Taxes in connection with the settlement of Company Options or Company Restricted Stock Awards and other than in connection with a customary cashless exercise of Company Options);
(viii) incur or enter into any agreement to incur any indebtedness for borrowed money or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person (other equity interests than the Company or assetsany direct or indirect wholly-owned Subsidiary of the Company) for borrowed money, formation of except to fund operations in the event the U.S. Congress allows for a joint venture lapse in federal agencies’ authority to appropriate funds or otherwisecurtails funding for nonessential activities in certain federal agencies or departments under the Company’s existing revolving credit facility in an aggregate amount not to exceed the maximum amount authorized under that agreement at any time to be outstanding;
(ix) except (A) any other Personas set forth in Section 5.1(a)(ix) of the Company Disclosure Schedule, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3C) inbound licenses for expenditures related to operational emergencies, make or authorize any capital expenditure in excess of $2,000,000 in the aggregate;
(x) settle or compromise any litigation, claim or other grants proceeding against the Company or assignments any of its Subsidiaries other than settlements or compromises where the amounts paid by the Company or any of its Subsidiaries in settlement or compromise do not exceed $2,000,000, in the aggregate; provided that the foregoing shall not permit the Company or any of its Subsidiaries to settle any litigation, claim or other proceeding that would impose material restrictions or changes on the business or operations of the Company or any of its Subsidiaries;
(xi) transfer, sell, lease, license, mortgage, pledge, surrender, abandon or allow to lapse or expire or otherwise dispose of, or grant any Lien other than any Permitted Lien on, any material amount of assets, rights (including Intellectual Property Property), properties, product lines or businesses of the Company or its Subsidiaries, other than (A) in the ordinary course of business;
1 Note , (B) pursuant to W&S: Subject to ongoing review by Contracts existing as of the Company.
date hereof or (vC) except in connection with any transaction between transactions solely among the Company and any wholly and/or its wholly-owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vixii) except to satisfy contractual obligations pursuant to Contracts, or as required under Plans existing as of the date hereof or as set forth in connection with any transaction between Section 5.1(a)(xii) of the Company Disclosure Schedule, the Company shall not, and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on shall not permit any of its material tangible property Subsidiaries to, (A) grant, pay or tangible assets, except for Company Permitted Encumbrances, commit to grant or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), pay any material Company IP severance or material tangible assets termination pay, (B) enter into any Plan with any director or executive officer of the Company, (C) adopt any new employee benefit plan or arrangement or amend, modify or terminate any existing Plan or ERISA Plan in a manner that materially increases the cost associated with such Plan or ERISA Plan, (D) make any new equity awards to any current or former director, executive officer, employee or consultant of the Company or any of its Subsidiaries, (E) otherwise increase or commit to increase any compensation or employee benefits payable to any director, officer or employee of the Company or any of its Subsidiaries or (F) fund or in any way secure any payments or benefits under any Plan;
(xiii) adopt or enter into a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation or other than: reorganization of the Company or any of its Subsidiaries (other than the Merger);
(A) sales of inventorymodify, goods amend or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets terminate any Material Contract other than (1) in the ordinary course of business consistent with past practice; practice or (2) modifications or amendments which are immaterial, or (B) pursuant to written Contracts enter into any new Contract or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchaseagreement that, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) if entered into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith would have been required to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth listed in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii3.15(a) of the Company Disclosure Schedule (as a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, Material Contract other than in the ordinary course of business in a manner consistent with past practicepractice (it being understood that the foregoing exception to this clause (B) shall not permit the entry into any Contract with an Affiliate or a “related person” (as such term is defined in item 404(a) of Regulation S-K under the Exchange Act));
(xxixv) take except as may be required by a change in GAAP or cause to be taken applicable Law, make any actionmaterial change in its financial accounting principles, policies, or knowingly fail practices;
(A) make any Tax election or take any position on a Tax Return filed on or after the date of this Agreement or adopt any method therein that is inconsistent with elections made, positions taken or methods used in preparing or filing similar returns in prior periods unless such position, election or method is pursuant to take applicable Law or cause the Code, (B) enter into any settlement or compromise of any Tax liability, (C) file any amended Tax Return that would result in a change in Tax liability, taxable income or loss, (D) change any annual Tax accounting period, (E) enter into any closing agreement relating to be taken any actionTax liability, which or (F) give or request any waiver of a statute of limitation with respect to any Tax Return, provided, that such election, settlement, amended Tax Return or any other action or failure to act described in the foregoing portion of this Section 5.1(a)(xvi) shall not require prior written consent of Parent if all such actions, in the aggregate, would not reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions a cost to the Mergers set forth Company and its Subsidiaries in ARTICLE V not being satisfiedexcess of $500,000; or
(xxiixvii) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of Nothing contained in this Agreement through is intended to give Parent or Merger Sub, directly or indirectly, the earlier right to control or direct the Company’s or any of the Closing or the termination of this Agreement, except (1) its Subsidiaries’ operations prior to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessEffective Time.
Appears in 2 contracts
Sources: Merger Agreement (Providence Equity Partners VI L P), Merger Agreement (Sra International Inc)
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through and until the Effective Time or the earlier of the Closing or the termination of this Agreement, except as (1w) otherwise expressly contemplated by this Agreement, (x) required by applicable Laws (y) set forth in Section 6.1 of the Company Disclosure Letter or (z) consented to the extent Parent shall otherwise give its prior consent in writing by Parent (such which consent will not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shallwill, and shall will cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by business consistent with past practice and in compliance with all applicable Laws, and will, and will cause each of its Subsidiaries to, use its reasonable best efforts to preserve intact its present business organization, maintain in effect all of its Permits, keep available the remaining provisions services of this Section 4.1(a) (including Section 4.1(a) its directors, officers and employees and maintain existing relations and goodwill with Governmental Entities, customers, distributors, lenders, partners, suppliers and others having material business associations with it or its Subsidiaries. Without limiting the generality of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) foregoing and subject to the extent Parent shall otherwise give its prior consent in writing (exceptions set forth in the case of subsections foregoing clauses (iv), (vi), (viii), (ixw), (x), (xiiy) and (z), (xiii), and (xvii) from the date of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of Agreement until the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementEffective Time, the Company shall will not (and shall will not permit its Subsidiaries to do any Company Subsidiary to):of the following:
(i) amend the Company’s Organizational Documents adopt or amend the Organizational Documents propose any change in its articles of any Company Subsidiaryincorporation or bylaws or such other similar applicable governing instruments;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate;
(iii) other than capital expenditures covered by clause (x) below, changeacquire assets (whether by merger, exchangetender offer, amend consolidation, purchase of property or otherwise) outside of the terms ordinary course of business from any other Person with a value or reclassify purchase price in the aggregate in excess of $10,000,000 in any transaction or series of related transactions;
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries including Shares and/or Class B Shares (other than the issuance, sale, pledge, disposition, grant, transfer, lease, license, guaranty or encumbrance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary) or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, except for the issuance of Shares pursuant to awards or rights outstanding as of the date of this Agreement in accordance with the terms of the Stock Plans, or as may be granted in accordance with, or otherwise in compliance with, the terms of this Agreement;
(iiiv) create or incur any material Lien on any of the assets including any material Owned Intellectual Property, other than Permitted Liens;
(vi) make any loans, advances or capital contributions to, guarantees of or investments in any Person (other than (1) between or among the Company and/or one or more direct or indirect wholly owned Subsidiary of the Company or (2) advances made in the ordinary course of business consistent with past practice to employees of the Company and its Subsidiaries for reimbursement of routine travel or business expenses in accordance with the terms of the applicable policy in effect on the date of this Agreement);
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another to any other wholly owned Subsidiary or any dividends required to be paid under any credit facility filed as an exhibit in the Company SubsidiaryReports filed with the SEC since June 28, 2014); provided, that the Company may make, declare and pay one regular quarterly cash dividend in each quarter of the fiscal year with a record date consistent with the record date for each quarterly period for the fiscal year ended June 27, 2015; provided, further, that such dividend per share shall not exceed (A) $0.39 per quarter for dividends with respect to fiscal year 2017 and (B) $0.41 per quarter for dividends with respect to fiscal year 2018;
(ivviii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any capital stock or securities convertible or exchangeable into or exercisable for any shares of capital stock of the Company or any of its Subsidiaries;
(ix) incur any Indebtedness, or issue or sell any debt securities or warrants or other rights to acquire (by mergerany debt security of the Company or any of its Subsidiaries, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for Indebtedness (A) any other Person, that is to be paid off in full and without penalty at or prior to the Effective Time and (Bi) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory incurred in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice pursuant to existing Contracts, or (ii) incurred to replace, renew, extend, refinance or refund any existing Indebtedness of obsolete equipment the Company or assets any of its Subsidiaries, (B) incurred as intercompany Indebtedness solely among the Company and its direct or indirect wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries or (C) Indebtedness not to exceed $10,000,000 in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries that is to be paid off in full and without penalty at or prior to the Effective Time other than in accordance with clauses (A) through (B);
(x) make or authorize any capital expenditures or series of related capital expenditures that are not in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ixxi) (A) adopt, terminate except as required by Law (including the legal obligation under the National Labor Relations Act or amend any Company Plan except similar national and provincial Canadian laws to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company bargain in good faith to be required to comply reach a labor contract with applicable Legal Requirements; (2) hiring any Person a labor organization that has been certified as the bargaining agent for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (iidesignated employee group) enter into any Contract or agreement that, if in effect on the date of this Agreement, that would constitute have been a Material Contract had it been entered into prior to this Agreement or (B) amend or modify in a material manner or terminate any Material Contract;
, or cancel, modify in a material manner or waive any debts, rights, or claims thereunder (xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAPpermitted pursuant to Section 6.1(a)(ix));
(xii) make any changes with respect to accounting policies or procedures, except as required by changes in applicable GAAP;
(except for elections made in the ordinary course of business)xiii) (A) waive, change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityrelease, settle or compromise any material liability for Taxes pending Action against the Company or any Tax auditof its Subsidiaries other than settlements or compromises of any Action (1) in which the amount paid by or on behalf of the Company or any of its Subsidiaries in settlement or compromise does not exceed $1,000,000 individually or $3,000,000 in the aggregate and (2) that would not impose any material restrictions on the business or operations of the Company or its Subsidiaries or (B) commence, claim, join or other proceeding relating to a material amount of Taxes, enter into appeal in any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, orAction, other than in the ordinary course of business;
(xiv) (A) make or change any material Tax election, agree (B) change the Company’s or any of its Subsidiaries’ method of accounting for Tax purposes, (C) file any material amended Tax Return, (D) settle, concede, compromise or abandon any material Tax claim or assessment, (E) surrender any right to an a refund of material Taxes or (F) consent to any extension or waiver of the statute of limitations limitation period applicable to any claim or assessment with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect fail to use commercially reasonable efforts to maintain in full force and effect the voting of any capital stock or other equity interests of Insurance Policies covering the Company (including any voting trust)and its Subsidiaries and their respective properties, other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business assets and businesses in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, form and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxixvi) take transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or cause allow to be taken lapse or expire or otherwise dispose of any actionmaterial assets (including any material Owned Intellectual Property), licenses, operations, product lines, businesses or knowingly fail interests of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, in each case except (1) in the ordinary course of business consistent with past practice, (2) for sales of obsolete assets or (3) for transactions involving a de minimis amount of assets in the aggregate;
(xvii) except as required pursuant to take existing written Benefit Plans in effect prior to the date of this Agreement or cause to be taken any actionas otherwise required by applicable Law and except as contemplated by this Agreement, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) pay, grant or provide any severance or termination payments or benefits to any director, officer, contractor or employee of the Code Company or any of its Subsidiaries; (B) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus, incentive or retention payments to, or make any equity awards to any director, officer, contractor or employee of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice for employees who are not officers; (C) establish, adopt, amend or terminate any Benefit Plan or amend the terms of any outstanding equity-based awards; (D) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Benefit Plan; (E) change in any material respect any actuarial or other assumptions used to calculate funding obligations with respect to any Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; (F) forgive any loans to directors, officers or employees of the Company or any of its Subsidiaries; or (G) hire or terminate without cause any executive officer or any employee with a target annual compensation opportunity in excess of $200,000, other than any such hire that is a replacement hire to fill a position in existence as of the date of this Agreement;
(xviii) other than in compliance with Section 6.2, take any action or omit to take any action that is reasonably likely to result in any of the conditions to the Mergers Merger set forth in ARTICLE V Article VII not being satisfied;
(xix) communicate with the directors, officers, employees or consultants of the Company regarding the compensation, benefits or other treatment they will receive in connection with the Merger or after the Closing, other than communications that are not inconsistent with (a) the terms of this Agreement or (b) previous public announcements or communications; or
(xxiixx) authorizeagree, approve authorize or commit to do any of the foregoing actions or enter into any agreement or make any commitment Contracts with respect to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing actions.
(b) Nothing contained in this Agreement is intended to give Parent agrees thator Merger Sub the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, during each of Parent and the period from Company will exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective operations.
(c) From and after the date of this Agreement through Agreement, the earlier Company will notify Parent promptly of any notice or other communication received by the Company or any of its Subsidiaries from the PBGC regarding any defined benefit pension plan of the Closing Company or the termination any of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business other than routine notices in the ordinary course of business. Parent agrees thatIn the event of any such notice or communication, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the will consult with Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares communications with the PBGC or its representatives and will act in accordance with Section 6.1(c) of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessDisclosure Letter.
Appears in 2 contracts
Sources: Merger Agreement (G&k Services Inc), Merger Agreement (Cintas Corp)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through hereof and prior to the earlier of the Closing Effective Time or the termination of this AgreementAgreement in accordance with its terms (unless Parent shall otherwise approve in writing, such approval not to be unreasonably withheld, conditioned or delayed), and except as otherwise expressly contemplated or permitted by this Agreement or required by applicable Law or as set forth in Section 7.1(a) of the Company Disclosure Schedule, the Company and its Subsidiaries shall cause the business of it and its Subsidiaries to be conducted in the ordinary course and it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, officers, employees, lenders and business associates.
(b) Without limiting the generality of the foregoing, and in furtherance thereof, from the date hereof until the Effective Time or the termination of this Agreement in accordance with its terms, except (1A) to the extent as otherwise specifically contemplated or permitted by this Agreement, (B) as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), (2C) as is required by applicable Law or (D) as set forth in Section 4.1(a7.1(b) of the Company Disclosure Schedule, the Company will not and will not permit its Subsidiaries to:
(3i) as may be required by applicable Legal Requirements, adopt any change in (A) the certificate of incorporation or bylaws of the Company or (4B) as expressly required by this Agreement, the other applicable governing instruments of the Subsidiaries of the Company shallthat, and shall cause in the case of clause (B), would adversely affect Parent;
(ii) except pursuant to a transaction expressly permitted by any of Sections 7.1(b)(iii) or 7.1(b)(xiv), merge, amalgamate or consolidate the Company or any of its Subsidiaries towith any other Person;
(iii) make any acquisition in excess of $50 million for all acquisitions in the aggregate, use commercially reasonable efforts to conduct its of the capital stock or other ownership interests of any other Person or the business or assets that comprise a business or product line of any other Person, whether by way of stock purchase, asset purchase, merger, consolidation or otherwise, except for acquisitions of inventory or supplies in the ordinary course of business; provided that any action expressly permitted by ;
(iv) other than (A) the remaining provisions issuance of this Shares upon the settlement of Company Equity Awards outstanding as of the date hereof or issued in accordance with Section 4.1(a7.1(b)(xvii) (including Section 4.1(aand dividend equivalents thereon, if applicable), (B) the issuance of shares of Company Subsidiary stock to the Company or any wholly owned Subsidiary of the Company Disclosure ScheduleCompany, (C) will not constitute a violation of the foregoing. During the period from as required to comply with any Benefit Plan, Benefit Agreement or other written agreement as in effect on the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in on Section 4.1(a7.1(b)(iv) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required dispositions permitted by this Agreementclause (xiv), the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) splitissue, combinesell, subdividedispose of, change, exchange, amend the terms of or reclassify grant any shares of the Company’s capital stock or other equity ownership interests of the Company or any Company Subsidiaryof its Subsidiaries or securities convertible or exchangeable into or exercisable for any shares of such capital stock or other ownership interests, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, ownership interests or such convertible or exchangeable securities;
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than (A) to the Company or its wholly owned Subsidiaries, (B) as required pursuant to any Contract made available to Parent in the data room prior to the date hereof, (C) extensions of trade credit in the ordinary course of business and (D) loans, advances or capital contributions in the aggregate of less than $15,000,000);
(vi) authorize, declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, other ownership interests or property) other securities, property or otherwise, with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestsownership interests (except dividends or distributions by any direct or indirect wholly owned Subsidiary of the Company to the Company or to any other wholly owned direct or indirect Subsidiary of the Company); provided, other than shares that the Company may, at its election, pay quarterly cash dividends in accordance with its past practice (including with respect to timing of declaration, record and payment dates and amount) but in no event in an amount that would exceed $0.23 per Share per fiscal quarter; provided, further, that the Company Common Stock issuable upon exercise of outstanding Company Optionsshall in no event declare any dividend that would be payable after the Effective Time;
(vivii) except reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of the capital stock of the Company or other ownership interests or securities convertible or exchangeable into or exercisable for any shares of the capital stock of the Company or other ownership interests of the Company (other than acquisitions in connection with any transaction between the cashless exercises of Company and any wholly owned Stock Options or vesting or payment of Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third partyEquity Awards, or incur any Lien Tax withholdings on any the vesting or payment of its material tangible property or tangible assetsCompany Equity Awards);
(viii) incur, except for Company Permitted Encumbrancesassume, issue, modify, renew, syndicate, guarantee, prepay, refinance or otherwise dispose of become liable for any Indebtedness (by mergerdirectly, consolidation, operation of law, division contingent or otherwise), any material Company IP or material tangible assets of the Company, ) (other than: than (A) sales any letters of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets credit issued in the ordinary course of business consistent with past practice; , (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business under (1) the Existing Credit Facility or (2) the Company’s commercial paper program, (C) any Indebtedness between the Company and any of its Subsidiaries or between the Subsidiaries of the Company or (D) in an amount not to exceed $50,000,000) or acquire or redeem, offer to acquire or redeem, or exercise any right to make an offer to acquire or redeem the 3.375% Notes due November 1, 2020;
(ix) make any capital expenditures, other than (A) capital expenditures in 2014 not in excess of the aggregate amount set forth in the Company’s capital expenditure plan for 2014 previously provided to Parent or capital expenditures in 2015 in an amount not in excess of 110% of the aggregate amount set forth in the Company’s 2014 capital expenditure plan and (B) any additional capital expenditures not described in clause (A) so long as the aggregate amount of such capital expenditures made pursuant to this clause (B) does not exceed $10,000,000 in the aggregate; provided, however, that the Company and its Subsidiaries shall be permitted to make emergency capital expenditures in an amount not to exceed $10,000,000 in the aggregate;
(x) make any material changes with respect to financial or Tax accounting methods of reporting income, deductions or other items to financial accounting purposes, except as required by applicable Law or by changes in GAAP;
(xi) other than (A) Dissenting Shares (which are the subject of Section 4.2(f)), (B) stockholder litigation (which is the subject of Section 7.16) and (C) as contemplated by Section 7.5, settle or propose to settle any litigation, arbitration or other proceeding by or before a manner Governmental Entity (x) for a monetary amount in excess of $10,000,000 in the aggregate, (y) that imposes any material equitable or material non-monetary relief on the Company, any of its Subsidiaries or any of its officers or directors or (z) that requires the admission of wrongdoing by the Company or any of its Subsidiaries of a nature that would reasonably be expected to have any material adverse effect on any division of the Company or any of its Subsidiaries or that disparages Parent or any of its Subsidiaries;
(xii) change its fiscal or Tax year or, except to the extent required by Law, make or change any material Tax election;
(xiii) enter into any settlement, compromise or closing agreement with respect to any material Tax Liability or Tax refund or file any amended Tax Return with respect to any material Tax or surrender any right to claim a material refund of Taxes (except to the extent the consequences thereof are adequately reserved in accordance with GAAP in the Company Reports);
(xiv) sell, lease, license, transfer or otherwise dispose of any of its properties or assets (including capital stock of any Subsidiary of the Company) with a value in excess of $20,000,000 (including the value of any assumed liabilities), other than (A) sales or other dispositions of inventory and other assets in the ordinary course of business, (B) the licensing or sublicensing of Intellectual Property in the ordinary course of business or (C) as required pursuant to existing Contracts made available to Parent in the dataroom prior to the date hereof;
(xv) (A) abandon, voluntarily permit to lapse before expiration, any Company IP that is material to the Company and its Subsidiaries, taken as a whole, or (B) sell, transfer or license to any third-person or otherwise extend any Company IP that is material to the Company and its Subsidiaries, taken as a whole, other than non-exclusive licenses of Intellectual Property rights granted by the Company or any of its Subsidiaries in the ordinary course of business consistent with past practice;
(viixvi) directly except in the ordinary course of business, enter into or indirectly repurchaseassume any swap, redeem cap, floor, collar, futures contract, forward contract, option and any other derivative financial instrument, contract or otherwise acquire arrangement, based on any shares commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, (including for interest rate and foreign exchange rate hedging), except foreign exchange hedging on customary commercial terms in compliance with the Company’s hedging policies in effect on the date hereof;
(xvii) except as required pursuant to a Benefit Plan or any Company Subsidiary’s capital stock Benefit Agreement in effect on the date hereof or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain eventsas set forth in Section 7.1(b)(xvii) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interestsDisclosure Schedule, except: (A) shares of Company Common Stock repurchased from employees grant or consultants provide any severance or former employees termination payments or consultants of the Company pursuant benefits to the exercise of repurchase rights existing prior to the date of this Agreement; any Employees or Other Service Providers, (B) shares of Company Common Stock accepted as payment for increase the exercise price of Company Options compensation or pay or establish any award or bonus to or for withholding Taxes incurred in connection with the exerciseany Employees or Other Service Providers, vesting or settlement of Company Options(C) establish, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or materially amend any Benefit Plan or Benefit Agreement or any plan, program, arrangement, policy or agreement that would be a Benefit Plan or Benefit Agreement if it were in existence on the date hereof, other than with respect to Benefit Plans and Benefit Agreements that are not described in clause (D) below and in cases where such adoption, termination or amendment applies only to non-Executive Officers of the Company Plan except or any Subsidiary of the Company in the ordinary course of business consistent with past practice and to the extent permitted by clauses (B), (C)that such action would not reasonably be expected to result in material expense or Liability to the Company or any of its Subsidiaries, (D) grant any equity or equity-based awards, long-term incentive awards or retention awards, (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of hire any member of the Company Board, current employee, or former new employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member Subsidiary of the Company Boardor engage any other individual to provide services to the Company or any Subsidiary of the Company, current employee or former employee other than with respect to non-Executive Officers of the Company or any Subsidiary of the Company Subsidiaryin the ordinary course of business consistent with past practice and with respect to Executive Officers as needed to replace such Executive Officer, (D) hire or promote any employee at or to the level of Vice President or above, or (EF) terminate the employment of any employee current Employee or the engagement of any current contractor of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (of the Company, other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practicepractice or for cause, (G) negotiate, enter into, amend, modify or terminate any Collective Bargaining Agreement, or (H) waive, limit, release or condition any Restrictive Covenant obligation or any Employee or Other Service Provider; provided, however, that the foregoing clauses (4A) increases – (H) shall not restrict the Company or any of its Subsidiaries from entering into or making available to newly hired employees or to Employees in compensation the context of promotions based on job performance or benefits required pursuant to any Company Plan workplace requirements, including replacement of an open position, in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are each case in the ordinary course of business in business, plans, agreements, benefits and compensation arrangements (but not including equity or equity-based awards) that have a manner value that is consistent with the past practicepractice of making compensation and benefits available to newly hired or promoted employees in similar positions; and (6) any other actions set forth provided, further, that the consent of Parent shall be required in the event of a promotion or hiring to the Executive Officer level unless such promotion or hiring is to replace an Executive Officer. For purposes of this Section 4.1(a)(ix7.1(b), the “Executive Officers” are those individuals listed on Section 7.1(b)(xvii) of the Company Disclosure Schedule;
(xxviii) except adopt or enter into a plan or agreement of complete or partial liquidation or dissolution of the Company;
(xix) grant any Lien on any material assets of the Company or any of its Subsidiaries other than Permitted Liens;
(xx) enter into any new line of business that would be material to the Company and its Subsidiaries, taken as a whole, outside the businesses being conducted by the Company and its Subsidiaries on the date hereof and any reasonable extensions thereof, other than in the ordinary course of business, course;
(i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (iixxi) enter into any Contract or agreement that, if after giving effect to the Merger, would limit or otherwise restrict in effect on any material respect Parent or any of its respective Affiliates (other than the date Company and its Subsidiaries), from engaging or competing in any line of this Agreementbusiness, in any location or with any Person;
(xxii) materially amend or modify, extend, terminate, sublease or grant any waiver under, any Material Contract or any Contract that would constitute a Material Contract;
Contract if entered into prior to the date hereof (xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes the expiration or renewal of any Material Contract in GAAP;
(xii) make (except for elections made in the ordinary course of businessaccordance with its terms), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, orease case, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiiixxiii) other than consignment enter into any transactions, agreements, arrangements or understandings with any significant holder of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget Shares or their respective affiliated entities (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (Band its Subsidiaries) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected required to impair, prevent or delay be disclosed under Item 404 of Regulation S-K promulgated under the consummation of the transactions contemplated herebySecurities Act;
(xvxxiv) enter into any agreement, understanding or arrangement with respect to terminate the voting employment of any capital stock Executive Officer without cause or other equity interests change the terms and conditions of the Company (including employment of any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business Executive Officer in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on which would constitute “good reason” under a Contract between the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedsuch Executive Officer; or
(xxiixxv) authorizeagree, approve authorize or enter into any agreement commit, whether or make any commitment not in writing, to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing
Appears in 2 contracts
Sources: Merger Agreement, Merger Agreement (Sigma Aldrich Corp)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Requirements or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course in all material respects and use commercially reasonable efforts to maintain and preserve intact its business organization, keep available the services of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of key employees and maintain satisfactory relationships with customers, suppliers and distributors. Without limiting the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such which consent shall not to be unreasonably withheld, conditioned or delayed), (B2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (C3) as may be required by applicable Legal Requirements, Requirements or (D4) as expressly permitted or required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company SubsidiarySubsidiary (other than any amendment to the Organizational Documents of any Company Subsidiary that would not reasonably be expected to be adverse to Parent or to impair, prevent or delay the consummation of any of the transactions contemplated hereby);
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiarystock;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (A) the Company’s regular quarterly dividend on the Company Common Stock to be declared and paid in the first quarter of the Company’s 2021 fiscal year only, in a quarterly amount not to exceed the amount set forth in Part 4.1(a)(iii) of the Company Disclosure Schedule, or (B) dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiarySubsidiary of the Company;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests stock or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)Person, (C) any business or division of another Personbusiness, or (D) any material assets assets, except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets Subsidiaries of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; , (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessbusiness or
Appears in 2 contracts
Sources: Merger Agreement (Analog Devices Inc), Merger Agreement (Maxim Integrated Products Inc)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier Except as set forth in Section 6.01 of the Closing Company Disclosure Letter, required by Law or the termination of this Agreement, except (1) consented to the extent Parent shall otherwise give its prior consent in writing in advance by Parent (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) during the period from the date hereof until the earlier of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by Effective Time and the valid termination of this AgreementAgreement pursuant to Section 9.01, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct (x) carry on its business only in the ordinary course of business; provided that , (y) use commercially reasonable efforts to preserve intact its current business organization and to preserve its relationships and goodwill with customers, suppliers, employees, licensors, licensees, distributors, lessors and others having significant business dealings with the Company or any action expressly permitted by of its Subsidiaries and (z) comply with applicable Law in all material respects. Without limiting the remaining provisions generality of this the foregoing, except as set forth in Section 4.1(a) (including Section 4.1(a) 6.01 of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing Letter, required by Law or the termination of this Agreement, except (A) consented to the extent Parent shall otherwise give its prior consent in writing in advance by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) during the period from the date hereof until the earlier of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by Effective Time and the valid termination of this AgreementAgreement pursuant to Section 9.01, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to):, directly or indirectly:
(i) amend the Company’s Organizational Documents declare, set aside or amend the Organizational Documents of pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any Company SubsidiarySecurities or Company Subsidiary Securities or set any record date therefor, other than dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to its parent (provided that neither the Company nor any of its Subsidiaries shall repatriate any material amount of cash as a dividend from any Subsidiary outside of the United States to the Company or any of its U.S. Subsidiaries);
(ii) split, combine, subdivide, change, exchange, reclassify or otherwise amend the terms of any Company Securities or reclassify Company Subsidiary Securities or issue or authorize the issuance of any other securities in lieu of or in substitution for shares of the Company’s capital stock or other equity interests of the Company or any Company SubsidiarySecurities;
(iii) declarerepurchase, set asideredeem or otherwise acquire any Company Securities or Company Subsidiary Securities or any options, make or pay any dividend warrants or other distribution rights to acquire any such Company Securities or Company Subsidiary Securities, other than (whether payable A) the acquisition by the Company of shares of Company Common Stock in cashconnection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay all or a portion of the exercise price of the Company Stock Options, stock (B) the withholding of shares of Company Common Stock to satisfy all or property) a portion of any Tax obligations with respect to Company Equity Awards, and (C) the acquisition by the Company of Company Equity Awards in connection with the forfeiture of such awards;
(iv) issue, deliver or sell any shares of Company Securities or Company Subsidiary Securities or other voting securities or equity interests, any securities convertible or exchangeable into any such shares, voting securities or equity interests, any options, warrants or other rights to acquire any such shares, voting securities, equity interests or convertible or exchangeable securities, any stock-based performance units, any Voting Company Debt or any other rights that give any person the Companyright to receive any economic interest of a nature accruing to the holders of Company Common Stock, other than, in each case, (A) upon the exercise or settlement of Company Equity Awards outstanding on the date hereof or issuances pursuant to the ESPP, in each case in accordance with their terms as of the date hereof, (B) by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Subsidiary of the Company Subsidiaryand (C) as described in Section 6.01(a)(iv) of the Company Disclosure Letter;
(ivv) acquire (by mergermortgage, consolidationpledge, operation hypothecate, grant an easement with respect to, or otherwise encumber or restrict the use of law, acquisition of stock, other equity interests Company Securities or Company Subsidiary Securities or assets, formation properties or rights (including Intellectual Property rights) of a joint venture the Company or otherwiseany of its Subsidiaries, or otherwise create, assume or suffer to exist any Liens thereupon except Permitted Liens and Liens granted as of the date of this Agreement with respect to the Company’s Existing Credit Facility;
(vi) amend the Company Certificate of Incorporation or the Company Bylaws or the comparable organizational documents of any Subsidiary of the Company;
(vii) acquire or agree to acquire from any third person (A) by merging or consolidating with, purchasing an equity interest in or a substantial portion of the assets of, making an investment in or loan or capital contribution to or in any other Personmanner, any person or business, or (B) any equity interest in any other Person (assets that are otherwise material to the Company and its Subsidiaries, other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (Cx) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipmentinventory, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property raw materials acquired in the ordinary course of business, (y) equipment and other assets acquired as contemplated under the Fixed Asset Plan as permitted pursuant to Section 6.01(a)(xi) below, and (z) any other assets for which the consideration payable by the Company or any of its Subsidiaries does not exceed $1,000,000 in the aggregate for all such assets;
1 Note to W&S: Subject to ongoing review by the Company.
(vA) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant lease, license, sub-license or otherwise permit to become outstanding any additional shares dispose of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, otherwise encumber any shares of its capital stock properties, rights or other equity interestsassets (including Intellectual Property rights), other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A1) sales of inventory, goods licenses of Software or sales of professional services in the ordinary course Ordinary Course of Business, (2) sales, relinquishment or other disposition of assets that are obsolete or that are no longer used in, or useful for, the conduct of the business of the Company and its Subsidiaries, in a manner consistent with past practice or of obsolete equipment or assets each case, in the ordinary course Ordinary Course of business consistent with past practice; Business, (B3) pursuant to written sales, licenses, sublicenses or other dispositions in the Ordinary Course of Business permitted under Contracts or commitments existing as of the date of this Agreement; , or (C4) as security for any borrowings permitted by Section 4.1(a)(viii); sales of assets with a value of less than $500,000 individually or (D) licenses granted to customers in a series of related transactions, or other third parties $1,000,000 in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreementaggregate; or (B) shares of abandon or permit to lapse any Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred Registered IP; provided, however, that in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms any of the applicable award;
foregoing cases described in clause (viiiA) incur or (other than draws on existing revolving loansB), redeem, repurchase, prepay (other than prepayments neither the Company nor any of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) its Subsidiaries will distribute or make available (including by contribution to an open source project or community) any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees Software developed by the Company or the Company any of its Subsidiaries in respect thereof)as Open Source Materials without first obtaining Parent’s prior written consent;
(ix) (A) adopt, terminate adopt or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) liquidation, dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in reorganization of the case Company or any of clause (B), transactions between or among direct or indirect wholly owned Company its Subsidiaries;
(xviix) (A) incur, create, assume or otherwise become liable for, any Indebtedness (excluding letters of credit put in place, and capital leases entered into, in each case, in the Ordinary Course of Business) owed to any third person, or amend, modify or refinance any Indebtedness owed to any third person (excluding with respect to letters of credit and capital leases in existence as of the date of this Agreement in the Ordinary Course of Business), (B) make any loans, advances or capital contributions to, or investments in, any other person, other than the Company or any of its wholly owned Subsidiaries (other than advances of expenses and other routine amounts to employees in the Ordinary Course of Business) or (C) redeem, repurchase, prepay, defease, cancel or otherwise acquire any Indebtedness (other than letters of credit and capital leases in the Ordinary Course of Business);
(xi) purchase, or commit to purchase, fixed or other capital assets except as contemplated by and in accordance with the FY18 Fixed Asset Plan set forth in Section 6.01(a)(xi) of the Company Disclosure Letter (the “Fixed Asset Plan”), which Fixed Asset Plan was approved as part of the Company’s FY2018 AOP by the Company Board on February 16, 2017;
(xii) pay, discharge, settle or compromise satisfy any litigationmaterial claims, claimliabilities or obligations (whether absolute, suitaccrued, action asserted or proceedingunasserted, except for settlements contingent or compromises otherwise), other than (A) the payment, discharge or satisfactionsatisfaction in the Ordinary Course of Business, or as required by their terms as in effect on the date hereof of claims, liabilities or obligations reflected or reserved against in the most recent audited financial statements (or the notes thereto) of the Company included in the Filed SEC Documents (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the Ordinary Course of Business, (B) payment of severance or other termination benefits to employees in the Ordinary Course of Business to the extent otherwise permitted pursuant to Section 6.01(a)(xix), (C) payment of fees and expenses to Representatives of the Company incurred in connection with the transactions contemplated by this Agreement; or (D) compromises, settlements or agreements to settle any Action which would not require Parent consent pursuant to Section 6.01(a)(xiii);
(xiii) commence any Action (other than any Action against Parent and Merger Sub with respect to the enforcement of this Agreement), or compromise, settle or agree to settle any Action made or pending by, or against, the Company or any of its Subsidiaries, other than the commencement or settlement of Actions in the Ordinary Course of Business that are unrelated to Intellectual Property Rights and involve only the payment by or to the Company or any of its Subsidiaries of money damages (net of insurance proceeds received) in an amount of no more than $1,000,000 individually or $5,000,000 in the aggregate; provided that the foregoing shall not permit the Company or any of its Subsidiaries to settle any Action (x) that would impose any restrictions or changes (other than de minimis restrictions or changes) to the business or operations of, or result in the imposition of equitable relief on, or require any admission of wrongdoing by, the Company or any of its Subsidiaries, or (y) for which such settlement is not permitted pursuant to Section 7.02;
(xiv) (A) enter into, terminate (except a termination of any Material Contract by its terms due solely to the passage of time), cancel, amend in any material respect or modify in any material respect any Material Contract or enter into any Contract that, if in effect on the date hereof, would have been a Material Contract, excluding, in each of the foregoing cases but subject to the following proviso, any such Contract which (1) is or would constitute a Material Contract under subsections (ii), (iii), (iv) or (xii) of Section 4.11(a), (2) is a renewal of a Contract made available to Parent on terms no less favorable in all material respects in the aggregate to Company and its Subsidiaries than the terms of such Contract as made available to Parent, (3) is a customer Contract providing for the sale of Company Products, (4) is a distributor Contract providing for third-party distribution of Company Products or (5) is a supplier or vendor Contract providing for the supply of goods or services for use in the production of Company Products, so long as such supplier or vendor Contract does not require and would not reasonably be expected to result in any payments (whether made directly or indirectly via a third person) by the Company or any of its Subsidiaries to any counterparty to such Contract (or any of such counterparty’s Affiliates) in an aggregate amount in excess of $3,000,000 per Contract or series of related Contracts or $15,000,000 in the aggregate, in each case, in any fiscal quarter of the Company, with the foregoing threshold amounts to be pro rated for the remaining period of the current fiscal quarter as of the date of this Agreement; provided that no Contract described in any of the foregoing clauses (1) through (5) shall be so excluded from the restrictions of this Section 6.01(a) if such Contract is (or, if entered into prior to the date hereof, would have been) a Material Contract pursuant to subsection (v), (vi), (viii) or (ix) of Section 4.11(a); and provided, further that no Contract described in the foregoing clause (5) shall be so excluded from the restrictions of this Section 6.01(a) if such Contract contains any purchasing commitment by the Company or any of its Subsidiaries for a term in excess of six (6) months from the date thereof; (B) waive any material term of or any material default under, or release, settle or compromise any material claim against the Company or any of its Subsidiaries or any material liability or material obligation owing to the Company or any of its Subsidiaries under, any Material Contract (except, in each case, as permitted pursuant to Section 6.01(a)(xiii)); (C) enter into any Contract which contains a change of control or similar provision that would require a payment to the other party or parties thereto in connection with the Offer, the Merger, the Support Agreement or the other transactions contemplated herein (including in combination with any other event or circumstance); or (D) amend or modify the Financial Advisor Agreement;
(xv) change its fiscal year or change any of its financial accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or applicable Law, or (other than as required by GAAP for any assets that are required to be marked-to-market on a periodic basis) revalue any of its material assets;
(xvi) (A) change any material method of Tax accounting or make, change or revoke any material Tax election, (B) file any material amended Tax Return or claim for Tax refund, (C) settle or compromise any material Tax liability or refund, (D) extend the statutory period of limitations with respect to the assessment or collection of any material Tax, (E) change any tax period, (F) prepare or file any material Tax Return other than on a basis consistent with past practice (except as otherwise required by a change in applicable Tax Law), or (F) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign law) or any Tax allocation, indemnification or sharing agreement (excluding any commercial agreements entered into in the ordinary course of business and not primarily relating to Taxes) or request any Tax ruling or Tax holiday;
(xvii) fail to keep in a manner consistent force insurance policies or replacement or revised provisions regarding insurance coverage with past practicerespect to the material assets, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, operations and (z) do not include an admission of liability or fault on the part activities of the Company or any Company Subsidiaryand its Subsidiaries as currently in effect;
(xviii) materially reduce enter into any new lease of real property involving payments of more than $200,000 in the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancelaggregate per year, or permit to lapse amend the terms of any material Company Registered IPexisting lease of real property that would require payments over the remaining term of such lease in excess of $200,000 per year, other than in its reasonable business judgment or in the ordinary course renewals of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business existing leases in the ordinary course of business. Parent agrees that, during ;
(xix) except as required by the period from terms of any Company Benefit Plan as in effect on the date of this Agreement through the earlier or as described in Section 6.01(a)(xix) of the Closing or the termination of this AgreementCompany Disclosure Letter, except (A) increase the compensation or benefits payable or to become payable to any of its directors, officers, employees or individual independent contractors (except for annual merit increases in base salary of employees who are not officers in the extent Ordinary Course of Business by no more than 10% per individual and not to exceed 4.0% in the Company shall otherwise give its prior consent in writingaggregate), (B) as set forth grant to any of its directors, officers, employees or individual independent contractors any increase in Section 4.1(b) of the Parent Disclosure Scheduleseverance or termination pay, (C) as may be required by applicable Legal Requirementspay or award, or commit to pay or award, any bonuses or incentive compensation, (D) as expressly permitted enter into any employment, consulting, severance, retention or required by this Agreementtermination agreement (including, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either for the avoidance of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) splitdoubt, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or propertyoffer letters) with respect to any shares of Parent’s capital stock its directors, officers, employees or the capital stock or other equity interest of any Parent Subsidiaryindividual independent contractors, other than dividends offer letters that do not provide any severance, retention, change in control or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent equity award commitments with new non-executive employee hires, and new contractor or another wholly owned Parent Subsidiary;
(iv) acquire (by mergerconsultant engagements, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), permitted under clause (CH) or clause (I) hereof or in connection with any business or division promotions of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory existing employees in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessOrdinary Course
Appears in 2 contracts
Sources: Merger Agreement (Nimble Storage Inc), Merger Agreement (Hewlett Packard Enterprise Co)
Interim Operations. 1
(a) The Company agrees thatshall, during the period from and after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) and prior to the extent Effective Time (unless Parent shall otherwise give its prior consent approve in writing (writing, with such consent approval not to be unreasonably withheld, conditioned or delayed), (2) and except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) otherwise expressly required by this Agreement or as may be required by applicable Legal RequirementsLaw, or (4) conduct its business in the Ordinary Course of Business and, to the extent consistent therewith, shall use its reasonable best efforts to, preserve its business organization intact and maintain satisfactory relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates and keep available the services of its present employees and agents. Without limiting the generality of and in furtherance of the foregoing sentence, from the date of this Agreement until the Effective Time, except as otherwise expressly required by this Agreement, required by applicable Law, required by the express terms of any Company Material Contract made available to Parent prior to the date of this Agreement, or approved in writing by Parent, the Company shallshall not:
(i) adopt or propose any change in its Organizational Documents;
(ii) merge or consolidate the Company with any other Person or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations or business;
(iii) acquire assets from any other Person, other than acquisitions of raw materials, inventory, equipment, tooling, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business supplies in the ordinary course Ordinary Course of business; provided that Business;
(iv) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, Encumber, or otherwise enter into any action expressly permitted by Contract or understanding with respect to the remaining provisions voting of, any shares of this Section 4.1(a) (including Section 4.1(a) capital stock of the Company, securities convertible or exchangeable into or exercisable for any such shares of capital stock, or any options, warrants or other rights of any kind to acquire any such shares of capital stock or such convertible or exchangeable securities (other than in respect of Company Disclosure Schedule) will not constitute a violation Options outstanding as of the foregoing. During the period from the date of this Agreement through in accordance with their terms and, as applicable, the earlier of Equity Plan as in effect on the Closing or the termination date of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(iiv) split, combine, subdivide, change, exchange, amend the terms of enter into any Contracts or reclassify any shares of other arrangements between the Company’s capital stock , on the one hand, and any director or other equity interests officer of the Company or any Person beneficially owning one percent or more of the outstanding Shares, on the other hand, except for compensatory arrangements entered into in the Ordinary Course of Business with Company SubsidiaryEmployees consistent with Section 7.1(a)(xxiii) and transactions with Parent or its Affiliates;
(iiivi) create or incur any Encumbrance that is not incurred in the Ordinary Course of Business on any of the assets of the Company;
(vii) make any loans, advances, guarantees or capital contributions to or investments in any Person;
(viii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryits Common Stock;
(ivix) acquire (by mergerreclassify, consolidationsplit, operation of lawcombine, acquisition of stocksubdivide or redeem, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its Common Stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company OptionsStock;
(vix) except in connection incur any Indebtedness (including the issuance of any debt securities, warrants or other rights to acquire any debt security);
(xi) enter into any Contract that would have been a Company Material Contract had it been entered into prior to this Agreement;
(xii) other than with any transaction between the respect to Company and any wholly owned Company Subsidiary Material Contracts related to Indebtedness, which shall be governed by Section 7.1(a)(x), terminate or among any wholly owned Company Subsidiariesamend, sellmodify, supplement or waive, or assign, convey, Encumber or otherwise transfer, lease in whole or license in part, rights or interest pursuant to or in any third party, or incur any Lien on any of its material tangible property or tangible assetsCompany Material Contract, except for Company Permitted Encumbrances, or otherwise dispose (x) expirations of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services such Contract in the ordinary course Ordinary Course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, Business and in accordance with the terms of such Contract with no further action by the applicable award;
(viii) incur (Company or other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any party to such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other PersonContract, except for any indebtedness among the Company and its wholly ministerial actions, (y) non-exclusive licenses under Intellectual Property Rights owned Company Subsidiaries or among any wholly purported to be owned Company Subsidiaries (and guarantees by the Company granted in the Ordinary Course of Business or (z) terminations, amendments, modifications, assignments, conveyances, transfers or expirations where, concurrent therewith, the Company Subsidiaries in respect thereof);
(ix) (A) adoptenters into a replacement Contract providing substantially similar property, terminate products or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect services on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxessubstantially similar terms;
(xiii) other than consignment of Company Products in the ordinary course of businesscancel, make modify or waive any capital expenditure that is not contemplated debts or claims held by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or waive any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000material rights;
(xiv) except as expressly required provided for by applicable Legal Requirements Section 7.13, amend, modify, terminate, cancel or let lapse an Insurance Policy, unless simultaneous with such termination, cancellation or lapse of any such Insurance Policy, a replacement self-insurance program is established by the Company’s Organizational DocumentsCompany or a replacement policy underwritten by an insurance company of nationally recognized standing is in full force and effect, convene (A) any special meeting in each case, providing coverage equal to or greater than the coverage under the terminated, canceled or lapsed Insurance Policy for substantially similar premiums, as applicable, as in effect as of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting date of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebythis Agreement;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under Transaction Litigation, which shall be governed by Section 7.16, and settlement of trade accounts payable in the Company Equity Plans otherwise permitted under this Agreement Ordinary Course of Business, settle or compromise any Proceeding for an amount in connection with excess of $100,000 individually or $250,000 in the granting of revocable proxies in connection with aggregate during any meeting of the Company’s shareholderscalendar year;
(xvi) adopt a plan of (A) complete or partial liquidation make any changes with respect to the legal structure of the Company or any Company Subsidiary to the Company’s accounting policies or (B) dissolutionprocedures, merger, consolidation, division, restructuring, recapitalization except as required by changes in GAAP or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company SubsidiariesLaw;
(xvii) settle or compromise enter into any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course line of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (geographic area other than confidentiality obligations), (y) involve the payment existing lines of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part business of the Company or and lines of products and services reasonably ancillary to any Company Subsidiaryexisting line of business;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain make any material changes to the existing insurance policieslines of business of the Company or adopt or make any material modifications to the Company’s strategic plan;
(xix) (A) amend make, change or revoke any Company Permits Tax election, change an annual Tax accounting period, adopt or change any Tax accounting method, file any amended Tax Return, enter into any closing agreement with respect to Taxes, settle any Tax claim, audit, assessment or dispute, surrender any right to claim a refund or take any action which would be reasonably expected to result in a manner that adversely impacts an increase in the Tax liability of the Company’s ability to conduct , or, in respect of any taxable period (or portion thereof) ending after the Closing Date, the Tax liability of Parent or its business in any material respect or (B) terminate or allow to lapse any material Company PermitsAffiliates;
(xx) (A) fail to pay any issuancetransfer, renewalsell, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandonlease, divest, cancel, allow to lapse or expire, or otherwise dispose of or transfer, or permit or suffer to lapse exist the creation of any material Encumbrance upon, any assets (tangible or intangible, including any Company Registered IPIntellectual Property Rights), other than Licenses, product lines or business of the Company, except in its reasonable business judgment or connection with services provided in the ordinary course Ordinary Course of business in a manner consistent with past practice, Business or (B) authorize the disclosure to any third party sales of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceobsolete assets;
(xxi) take cancel, abandon or cause otherwise allow to be taken lapse or expire any actionCompany Intellectual Property Rights, except in the Ordinary Course of Business with respect to Company Intellectual Property Rights that are not material to any business of the Company;
(xxii) adopt or implement any shareholder rights plan or similar arrangement;
(xxiii) except as required pursuant to the terms of any Company Benefit Plan in effect as of the date of this Agreement or as required by Law, (A) increase in any manner the compensation or fees, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any Company Employee, except reasonable holiday bonuses payable to all employees, reasonable compensation adjustments for customer service employees, and reasonable compensation adjustments required for exceptional performance or specific needs not to exceed $100,000 in the aggregate unless approved in advance by the Board, (B) become a party to, establish, adopt, amend, commence participation in or terminate any Company Benefit Plan or any arrangement that would have been a Company Benefit Plan had it been entered into prior to the date of this Agreement, (C) grant any new awards, or knowingly amend or modify the terms of any outstanding awards, under any Company Benefit Plan, (D) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, (E) forgive any loans or make any extensions of credit in the form of a personal loan to any Company Employee (other than routine travel advances issued in the Ordinary Course of Business), (F) hire any employee or engage any independent contractor (who is a natural person) with an annual salary or wage rate or consulting fees and target cash bonus opportunity in excess of $100,000 or (G) terminate the employment of any executive officer other than for cause;
(xxiv) become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, labor organization, works council or similar organization;
(xxv) fail to maintain policies and procedures designed to ensure compliance with the FCPA and Other Anti-Bribery Laws;
(xxvi) fail to maintain policies and procedures designed to ensure compliance with the Export and Sanctions Regulations in each jurisdiction in which the Company operates or is otherwise subject to jurisdiction;
(xxvii) take any action or fail to take or cause to be taken any action, which action or failure to act would that is reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Merger set forth in ARTICLE V Article VIII not being satisfied;
(xxviii) create a Subsidiary of the Company; or
(xxiixxix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as Nothing set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through shall give Parent, directly or indirectly, the earlier of right to control or direct the Closing or the termination of this Agreement, except (A) Company’s operations prior to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessEffective Time
Appears in 2 contracts
Sources: Merger Agreement (AeroGrow International, Inc.), Merger Agreement (SMG Growing Media, Inc.)
Interim Operations. 1
(a) The Company agrees that, during From and after the period from the date execution and delivery of this Agreement through until the earlier of the Closing or Effective Time and the termination of this AgreementAgreement and abandonment of the transactions contemplated by this Agreement pursuant to Article IX, except (1i) to the extent Parent shall as otherwise give its prior consent in writing (such consent not to be unreasonably withheldrequired, conditioned contemplated or delayed)permitted by this Agreement or as required by a Governmental Entity or applicable Law, (2ii) as set forth in Section 4.1(a7.1(a) of the Company Disclosure Schedule, Schedule or (3iii) as may Parent shall otherwise consent in writing (which consent shall not be required by applicable Legal Requirementsunreasonably withheld, delayed or (4) as expressly required by this Agreementconditioned), the Company (A) shall, and shall cause the Company its Subsidiaries to, use commercially reasonable efforts to conduct its business their respective businesses in the ordinary course Ordinary Course of business; provided that any action expressly permitted by Business in all material respects, (B) shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to (x) maintain all existing relationships and goodwill with key customers, suppliers and other persons having material business relationships with the remaining provisions Company and its Subsidiaries and (y) keep available the services of this Section 4.1(a) (including Section 4.1(a) the officers and key employees of the Company Disclosure Scheduleand its Subsidiaries, and (C) will not constitute a violation without limiting the generality of the foregoing. During , shall not, and shall cause its Subsidiaries not to:
(i) adopt or propose any change in its Organizational Documents;
(ii) merge or consolidate with any other Person, except for any such transactions solely among Wholly Owned Subsidiaries of the period Company,
(iii) adopt or enter into a plan of restructuring, reorganizing, dissolving, recapitalizing, complete or partial liquidation or similar transaction;
(iv) enter into any agreements or arrangements imposing material changes or restrictions on its properties, assets, operations or businesses;
(v) acquire or agree to acquire by merger, consolidation, acquisition of stock, equity or assets or otherwise, any business, Person, division, properties or assets from any other Person, other than purchases or acquisitions of assets in the Ordinary Course of Business with a fair market value or purchase price not in excess of $1 million in any individual transaction or $2 million in the aggregate;
(vi) transfer, sell, lease, sublease, license, pledge, mortgage, assign, divest, cancel or otherwise dispose of, or incur, permit or suffer to exist the creation of any Encumbrance (other than any Permitted Encumbrance) upon any properties or assets (excluding Intellectual Property Rights) material to the Company, except in connection with (A) sales of obsolete assets or (B) sales, leases, licenses or other dispositions of assets, in each case with a -50- fair market value (as reasonably determined by the Company) not in excess of $500,000 in any individual transaction or $1 million in the aggregate;
(vii) issue, deliver, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, Encumber or otherwise enter into any Contract or understanding with respect to the voting of or transfer any shares of capital stock of the Company or capital stock or other equity or equity-based interests of any of its Subsidiaries, securities convertible or exchangeable into or exercisable for any such shares of capital stock or other equity interests, or any options, warrants or other rights of any kind to acquire any such shares of capital stock, other equity interests or such convertible or exchangeable securities (other than (A) the delivery of any Common Shares upon (1) the conversion of either the Preferred Shares (including in respect of dividends accumulated on the Preferred Shares) in accordance with the terms of the Preferred Shares or (2) the conversion of the Company Notes in accordance with the Indenture and the exercise of the Capped Call Transactions in accordance with the Capped Call Confirmations (B) the issuance of Preferred Shares in connection with the payment of dividends on the Preferred Shares in accordance with the terms of the Preferred Shares or (B) the issuance of shares of such capital stock, other equity securities or convertible or exchangeable securities (1) by a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company, (2) in respect of Company Equity Awards outstanding as of the date of this Agreement through in accordance with their terms and, as applicable, the earlier Stock Plans in effect as of the Closing Capitalization Time or the termination of this Agreement, except (A3) pursuant to the extent Parent shall otherwise give ESPP in accordance with its prior consent in writing (in the case of subsections (ivterms and subject to Section 4.3(g), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(iiviii) splitmake any loans, combineadvances, subdivide, change, exchange, amend guarantees or capital contributions to or investments in any Person in excess of $200,000 in the terms of or reclassify any shares of the Company’s capital stock or aggregate (other equity interests of than between the Company or and any Company Subsidiaryof its Wholly Owned Subsidiaries in the Ordinary Course of Business);
(iiiix) declare, set aside, establish a record date for accrue, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise with respect to any shares of the Company’s capital stock or the its capital stock or other equity interest interests (and for the avoidance of any doubt, excluding the Company SubsidiaryNotes) of the Company or its Subsidiaries, other than except for (A) dividends or distributions only to the extent paid by any wholly owned Company Wholly Owned Subsidiary to the Company or another wholly owned to any other Wholly Owned Subsidiary of the Company Subsidiaryor (B) dividends payable to the holders of Preferred Shares, payable in cash or Preferred Shares, in accordance with the terms of the Preferred Shares;
(ivx) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by mergeror offer to do any of the foregoing), consolidationdirectly or indirectly, operation any of law, acquisition of its capital stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales the withholding of inventory, goods or services in Common Shares to satisfy the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as payment of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to exercise price on the exercise of repurchase rights existing prior to the date of this Agreement; a Company Option or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with Tax obligations upon the exercise, vesting or settlement of Company OptionsEquity Awards outstanding as of the date of this Agreement, in each case, in accordance with their terms and, as applicable, the Stock Plans as in effect as of the Capitalization Time and (B) pursuant to an exercise of the Capped Call Transactions in accordance with the terms of the applicable awardtheir terms;
(viiixi) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel assume any indebtedness for borrowed money, guarantee any such indebtedness, issue indebtedness for borrowed money or sell any debt securities enter into a “keep well” or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, similar arrangement in respect of indebtedness for borrowed money except for any such indebtedness among not to exceed $2.5 million individually or $5 million in the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)aggregate;
(ixxii) (A) adoptincur, terminate make or amend authorize any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of accrual or commitment for, capital expenditures, or any member obligations or liabilities in connection therewith -51- except as contemplated by or reasonably related to, and which shall not exceed 107.5% of the Company Boardaggregate amounts set forth in, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions capital budget set forth in Section 4.1(a)(ix7.1(a)(xii) of the Company Disclosure Schedule;
(xxiii) except in the ordinary course of businessenter into, (i)(A) terminate or materially amend or terminate (except for terminations any Contract pursuant to which the expiration of the existing term of any Material Contract) any Material Contract Company or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
Subsidiaries purchase from a third party service provider Software (xii“Third Party IT Contracts”) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course Ordinary Course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due Business with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other such Contract that involve aggregate annual payments of less than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice$300,000);
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 2 contracts
Sources: Merger Agreement (Voya Financial, Inc.), Merger Agreement (Voya Financial, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Requirements or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of consistent with past practice in all material respects and use commercially reasonable efforts to maintain and preserve intact its business organization and maintain satisfactory relationships with customers, suppliers and distributors and other Persons with whom the Company Disclosure Schedule) will not constitute a violation of or any Company Subsidiary has material business relations. Without limiting the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such which consent shall not to be unreasonably withheld, conditioned or delayed), (B2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (C3) as may be required by applicable Legal Requirements, Requirements or (D4) as expressly or required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):), in each case by merger, consolidation, division, operation of law, or otherwise:
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (A) the Company’s regular quarterly dividend on the Company Common Stock to be declared and paid in the third quarter of the Company’s 2021 fiscal year, in a quarterly amount not to exceed the amount set forth in Part 4.1(a)(iii) of the Company Disclosure Schedule, provided, that if the initial End Date is extended pursuant to Section 6.1(b), the Company may resume its regular quarterly dividend (provided, that any such quarterly dividend may not be in an aggregate amount that exceeds the aggregate amount of the Company’s most recent quarterly dividend prior to the date hereof) on the Company Common Stock until the earlier of the Closing or termination of this Agreement, or (B) dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiarySubsidiary of the Company;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)Person, (C) any business or division of another Personbusiness, or (D) any material assets assets, except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company SubsidiariesSubsidiaries of the Company; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or business, (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessbusiness or (4) acquisitions in one or more transactions with respect to which the aggregate consideration for all such transactions does not exceed $20,000,000 or (5) investments in any other Person in one or more transactions with respect to which the aggregate investment amount for all such transactions does not exceed $20,000,000;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Subsidiary of the Company Subsidiary or among any wholly owned Company SubsidiariesSubsidiaries of the Company, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than than: (A) shares of Company Common Stock issuable upon exercise of outstanding Company OptionsOptions or the vesting of outstanding Company RSUs; and (B) pursuant to the Company ESPP in the ordinary course of business consistent with past practice and in accordance with the terms thereof and of this Agreement;
(vi) except in connection with any transaction between the Company and any wholly owned Subsidiary of the Company Subsidiary or among any wholly owned Company SubsidiariesSubsidiaries of the Company, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrancesencumber, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practicebusiness; (B) pursuant to written Contracts or commitments existing as of the date of this AgreementAgreement and set forth in Part 4.1(a)(vi) of the Company Disclosure Schedule; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice; or (E) dispositions of assets which do not constitute Company IP, and with respect to which the fair market value of all such assets does not exceed $10,000,000 in the aggregate;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights binding on the Company and existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of options to purchase Company Options Common Stock pursuant to the Company Equity Plan or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company OptionsOptions and Company RSUs, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans)A) incur, redeem, repurchase, prepay (other than prepayments of revolving loans)prepay, defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or advances or capital contributions to any other Person, except for for: (1) repayment of the 2021 Notes when due in accordance with their terms, including pursuant to the Company’s Rule 10b5-1 plan; (2) borrowings in an aggregate principal amount outstanding at any time not to exceed $25,000,000 incurred in the ordinary course of business pursuant to existing credit facilities or letters of credit, (3) any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Subsidiaries of the Company Subsidiaries (and guarantees by the Company or the Company its Subsidiaries in respect thereof)) and (4) purchase money financings and capital leases entered into in the ordinary course of business in an aggregate amount not to exceed $25,000,000 at any time outstanding; or (B) incur any Lien on any of its material property or material assets other than in the ordinary course of business consistent with past practice and except for Company Permitted Encumbrances;
(ix) (A) except in the ordinary course of business consistent with past practice adopt, terminate or amend any Company Plan except to other than if such action would not increase the extent permitted annual expense of the given Company Plan by clauses a material amount (Bbut in no event will the aggregate amount of all increases in such expenses exceed $10,000,000), (C)provided, (D) or (E) that the Company may enter into offer letters, employment agreements and similar arrangements with employees below the level of this Section 4.1(a)(ix)Corporate Vice President in the ordinary course of business consistent with past practice, (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Boarddirector, independent contractor or current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Boarddirector, independent contractor or current employee or former employee of the Company or any Company Subsidiary, (D) except in the ordinary course of business consistent with past practice, in respect of employees at a level below Corporate Vice President that would not increase the number of Vice Presidents by more than 10% over the number of Vice Presidents employed by the Company as of the date of this Agreement, hire or promote any employee at or to the level of Vice President or aboveemployee, or (E) terminate the employment of any employee at or above the level of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 Corporate Vice President (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereofhereof and listed in Part 4.1(a)(ix) of the Company Disclosure Schedule; (53) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) as set forth in amounts that are Part 4.1(a)(ix) of the Company Disclosure Schedule; (4) payment of cash incentive compensation to the extent set forth in Part 4.1(a)(ix) of the ordinary course of business in a manner consistent with past practice; Company Disclosure Schedule and (65) any other actions set forth in Section Part 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business and for renewals or extensions of any existing Material Contract or Material Real Property Lease entered into in the ordinary course of business, (i)(A) materially amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material ContractContract or Material Real Property Lease) any Material Contract or Material Real Property Lease or (B) waive, release or assign any material rights under any Material ContractsContracts or Material Real Property Leases, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material ContractContract or Material Real Property Lease;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change or adopt any Tax accounting period or material method of Tax accounting, amend any material Tax Company Return if such amendment would reasonably be expected to result in a material Tax liability, file any Company Return prepared in a manner inconsistent with past practice, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of TaxesTaxes (except to the extent that a reserve for such Taxes has been established in the financial statements contained or incorporated by reference into the Company SEC Documents), enter into any agreement with “closing agreement” within the meaning of Section 7121 of the Code (or any similar state, local or non-U.S. Legal Requirement) (except to the extent that a Governmental Entity relating to reserve for such Taxes if such agreement would reasonably be expected to result has been established in a material Tax liabilitythe financial statements contained or incorporated by reference into the Company SEC Documents), request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to Taxes, to the extent, in each case, that such actions would reasonably be expected, individually or in the aggregate, to have a material amount adverse impact on any Tax liabilities of TaxesParent or any of the Parent Subsidiaries (which would include the Company and the Company Subsidiaries) after the Closing Date;
(xiii) other than consignment sell, transfer, assign, exclusively license, or otherwise dispose of to any third party (by merger, consolidation, operation of law, division or otherwise), or mortgage, encumber or exchange any material Intellectual Property owned, or purported to be owned, by the Company Products in or any Subsidiary of the ordinary course of business, Company;
(xiv) make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiiiPart 4.1(a)(xiv) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Subsidiary of the Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries in the same fiscal year (and with respect to the 2021 fiscal year, since the date of this Agreement Agreement) would not, in the aggregate, exceed twenty percent (20%) of the aggregate CapEx Budget by more than $100,000for such fiscal year;
(xivxv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders stockholders other than the Company Shareholder Stockholder Meeting or (B) any other meeting of the Company’s shareholders stockholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xvxvi) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans Plan otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersstockholders;
(xvixvii) adopt a plan of (A) complete or partial liquidation of the Company or any Subsidiary of the Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company SubsidiariesSubsidiaries of the Company;
(xviixviii) (A) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than that (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y1) involve the payment of money greater than $100,000 solely monetary remedies with a value not in excess of existing insurance coverage$35,000,000 in the aggregate to be paid by the Company and its Subsidiaries, (2) do not impose any restriction on the Company’s business or the business of the Company Subsidiaries, (3) do not relate to any litigation, claim, suit, action or proceeding by the Company’s stockholders in connection with this Agreement or the Merger and (z4) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary, or (B) commence any material litigation or other claim, suit, action or proceeding, other than (1) in the ordinary course of business consistent with past practice or (2) commencing any counterclaim to preserve, protect or enforce any Company IP or material assets of the Company;
(xviiixix) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xixxx) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xxxxi) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit enter into any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessind
Appears in 2 contracts
Sources: Merger Agreement (Xilinx Inc), Merger Agreement (Advanced Micro Devices Inc)
Interim Operations. 1
(a) The Each of the Company and Parent covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Effective Time (unless Parent or the termination of this AgreementCompany, except (1) to the extent Parent as applicable, shall otherwise give its prior consent approve in writing (such consent which approval shall not to be unreasonably withheld, conditioned or delayed)), (2) and except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required contemplated by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; as provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments Contract in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing effect as of the date of this Agreement; , or (C) as security for any borrowings permitted required by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties applicable Law, the business of it and its Subsidiaries shall be conducted in the ordinary course Ordinary Course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates. Without limiting the generality of business and in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares furtherance of the Company’s or any Company Subsidiary’s capital stock or equity interestsforegoing, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement until the Effective Time, except as otherwise expressly: (i) contemplated by this Agreement; (ii) contemplated by any Contract entered into prior to, concurrently with or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything Agreement by Parent with respect to the contrary in this Section 4.1(a)(ixOther Parent Transactions (as such Contract may be amended, supplemented or otherwise modified from time to time), provide such Person with compensation and benefits for such position consistent with past practice; (3iii) hiring any Person for employment in accordance with required by applicable Law or the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term terms of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract(iv) as approved in writing (which approval shall not be unreasonably withheld, conditioned or delayed) by the other Party; or (v) set forth in the corresponding subsection of Section 7.1 of the Company Disclosure Letter, as it relates to the Company and its Subsidiaries, or on Section 7.1 of the Parent Disclosure Letter, as it relates to Parent and its Subsidiaries, each Party, on its own account, shall not and shall not permit its Subsidiaries to:
(i) make any material change to the nature of its business and operations;
(xiii) make any change to its Organizational Documents as in effect on the date of this Agreement in any manner that would reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of such Party to satisfy any of the conditions to, or the consummation of, the Merger or the other Transactions;
(iii) (A) merge or consolidate itself or any of its methods Subsidiaries with any other Person (expressly excluding, for the avoidance of financial accounting doubt, any of the Other Parent Transactions), or accounting practices (B) adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, in each case, except (1) such transactions solely between or among, or solely involving, such Party and one or more of its wholly owned Subsidiaries, or a Subsidiary of such Party and one or more wholly owned Subsidiaries of such Subsidiary, (2) as would not reasonably be expected to result in a Company Material Adverse Effect or Parent Material Adverse Effect, as applicable, or (3) as would not reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of such Party to satisfy any of the conditions to, or the consummation of, the Merger or the other Transactions;
(iv) except as required by the Company Agreement, issue, sell, grant, transfer or authorize the issuance, sale or grant, or otherwise enter into any Contract with respect to the voting of, any of its partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable (other than the issuance of partnership interests, limited liability company interests, shares of capital stock or equity interests (A) by its wholly owned Subsidiary to it or another of its wholly owned Subsidiaries or (B) in respect of equity-based awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the plan documents as in effect on the date of this Agreement), or securities convertible or exchangeable into or exercisable for any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or any options, warrants or other rights of any kind to acquire any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or such convertible or exchangeable securities;
(v) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or securities convertible or exchangeable into or exercisable for any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable;
(vi) waive, release, assign, settle or compromise any claim, action or proceeding, including any state or federal regulatory proceeding seeking damages or injunction or other equitable relief, which waiver, release, assignment, settlement or compromise would reasonably be expected to result in a Company Material Adverse Effect or Parent Material Adverse Effect, as applicable;
(vii) other than in the Ordinary Course, make, change or revoke any material Tax election, adopt or change any material Tax accounting method, file any material amended Tax Return, settle any material Tax claim, audit, assessment or dispute for an amount materially in excess of the amount reserved or accrued on such Party’s most recent consolidated balance sheet included in the Parent Reports or Company Reports, as applicable, or surrender any right to claim a refund of a material amount of Taxes;
(viii) make any material changes with respect other than to accounting policies, except as required by changes in GAAP;
(xiiix) make (except for elections made or declare any dividends or distributions to the holders of Common Units or Parent Common Stock, in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, oreach case, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedOrdinary Course; or
(xxiix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during Notwithstanding anything to the period from the date of this Agreement through the earlier of the Closing or the termination of contrary in this Agreement, except a Party’s obligations under Section 7.1(a) to take an action or not to take an action, or to cause its Subsidiaries to take an action or not to take an action, shall, with respect to any Persons (1and their respective Subsidiaries) controlled by such Party, or in which such Party otherwise has a voting interest, but that are not wholly owned Subsidiaries of such Party or have public equity holders, only apply (i) to the extent permitted by the Company shall otherwise give organizational documents and governance arrangements of such entity and its prior consent in writing (such consent not to be withheld, conditioned or delayed)subsidiaries, (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (Aii) to the extent the Company shall otherwise give a Party is authorized and empowered to bind such entity and its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (subsidiaries and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid permitted by any wholly owned Parent Subsidiary to Parent the Party’s or another wholly owned Parent Subsidiary;
its Subsidiaries’ duties (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture fiduciary or otherwise) (A) to such entity and its subsidiaries or any other Person, (B) any of its equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessholders.
Appears in 2 contracts
Sources: Merger Agreement (Enbridge Energy Management L L C), Merger Agreement (Enbridge Inc)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) and prior to the extent Effective Time (unless Parent shall otherwise give its prior consent approve in writing (writing, such consent approval not to be unreasonably withheld, conditioned or delayed, and except as otherwise expressly contemplated by this Agreement), the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and it and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of its and its Subsidiaries’ present employees and agents. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the Effective Time, except (2A) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business (B) as Parent may approve in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a)writing, such consent approval not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required contemplated by applicable Legal Requirements, the IP Group Sale and Trust Distribution as described in the term sheet attached hereto as Exhibit B or (D) as expressly required by this Agreementset forth on Section 5.1(a) of the Company Disclosure Letter, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents or amend the Organizational Documents any of any Company Subsidiaryits organizational documents, except as specifically required by this Agreement;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing changes or restrictions on its assets, changeoperations or businesses;
(iii) acquire from any other Person any asset or group of related assets with a value or purchase price in excess of $25,000 individually or $100,000 in the aggregate, exchangein any transaction or series of related transactions;
(iv) issue, amend sell, pledge, dispose of, grant, transfer, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify Encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than the issuance of shares by a Subsidiary of the Company Subsidiaryto the Company or a wholly owned Subsidiary of the Company), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiv) create or incur any Encumbrances on any FCC Licenses, or create or incur any Encumbrances on any other asset or group of related assets of the Company or any of its Subsidiaries having a value in excess of $25,000 individually or $100,000 in the aggregate;
(vi) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company), except in the ordinary course of business consistent with past practice and in no event in excess of $10,000 individually or $25,000 in the aggregate;
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiarystock, other than (except for dividends or distributions only to the extent paid by any wholly owned Company direct or indirect Subsidiary to of the Company to its stockholders or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of unit-holders on a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory pro rata basis in the ordinary course of business consistent with past practices) or (3) inbound licenses or other grants or assignments enter into any agreement with respect to the voting of Intellectual Property in the ordinary course of businessits capital stock;
1 Note to W&S: Subject to ongoing review by the Company.
(vviii) except in connection with any transaction between the Company and any wholly owned Company Subsidiary reclassify, split, combine, subdivide or among any wholly owned Company Subsidiariesredeem, issue, sell, grant purchase or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its capital stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionsstock;
(viix) except in connection with incur any transaction between indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services indebtedness for borrowed money incurred in the ordinary course of business in a manner consistent with past practice practices (A) in replacement of existing indebtedness for borrowed money on terms substantially consistent with or more beneficial than the terms of obsolete equipment the indebtedness being replaced as of the date of such replacement, or assets (B) in connection with guarantees by the Company of indebtedness of wholly owned Subsidiaries of the Company as of the Effective Time complying with clause (A) above;
(x) enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement, unless it is on terms substantially consistent with, or on terms more favorable to the Company and/or its Subsidiaries (and to Parent and its Subsidiaries and Affiliates following the Closing) than, a Contract it is replacing;
(xi) amend, modify or terminate any Material Contract, or waive, release or assign any material rights, claims or benefits under any Material Contract, in each case except in the ordinary course of business consistent with past practices;
(xii) make any changes with respect to accounting policies or procedures, except as required by changes in applicable generally accepted accounting principles, by Regulation S-X under the Securities Act, or by the Public Company Accounting Oversight Board or Financial Accounting Standards Board;
(xiii) settle (x) any litigation or claim or (y) other proceedings before a Governmental Entity, in each case for an amount in excess of $25,000 (excluding amounts that may be paid under insurance policies);
(xiv) except as required by applicable Law, (A) make any Tax election that is material to the Company and its Subsidiaries, taken as a whole, or take any position that is material to the Company and its Subsidiaries, taken as a whole, on any material Tax Return filed on or after the date of this Agreement, that is inconsistent with elections made or positions taken in prior periods, (B) change any material method of Tax accounting, which change is material to the Company and its Subsidiaries, taken as a whole, (C) amend any Tax Return with respect to an amount of Taxes that is material to the Company and its Subsidiaries, taken as a whole, or (D) settle or resolve any Tax controversy that is material to the Company and its Subsidiaries, taken as a whole, other than, in each case, in the ordinary course of business consistent with past practice; ;
(Bxv) pursuant transfer, sell, lease, assign, license, surrender, divest, forfeit, cancel, abandon or allow to written Contracts lapse or commitments existing as expire, fail to extend or defend or otherwise dispose of any part of its assets (including material Intellectual Property), FCC Licenses, securities or equity of any Subsidiary, licenses, operations, rights, product lines, businesses or interests therein of the date of this Agreement; Company or its Subsidiaries, except (CA) as security for any borrowings permitted by Section 4.1(a)(viii); in connection with services or (D) licenses granted to customers or other third parties products provided in the ordinary course of business in a manner consistent with past practice;
(vii) directly practices or indirectly repurchasesales of obsolete assets, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares for sales, leases, licenses or other dispositions of Company Common Stock accepted as payment for any asset or any group of related assets (other than FCC Licenses or wireless spectrum) with a fair market value not in excess of $100,000 individually or $250,000 in the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable awardaggregate;
(viiixvi) incur (make or commit to any capital expenditures other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates practice and target annual cash bonus opportunities) in amounts that are in the ordinary course aggregate in any event not in excess of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule$100,000;
(xxvii) enter into any Contract pursuant to which the Company or any of its Subsidiaries agrees to provide any wireless services to any Person as an agent or reseller if such Contract is not terminable by the Company or one of its Subsidiaries on 60 days’ or less notice without penalty;
(xviii) hire or rehire any new or additional employees or terminate any current employees, except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxixix) take except as required pursuant to a Benefit Plan or cause to be taken any actionexisting written, binding agreements as in effect as of the date of this Agreement, or knowingly fail to take or cause to be taken any actionas otherwise required by applicable Law, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) grant new or increase existing compensation, severance or other benefits payable or to become payable to any director, officer or employee of the Code Company or any of its Subsidiaries, (B) result adopt, enter into, establish, or materially amend, modify or terminate any Benefit Plan or any arrangement that would constitute a Benefit Plan had it been in any effect as of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through or (C) take any action to accelerate the earlier vesting or payment, or fund or in any other way secure the payment, of the Closing compensation or the termination of this Agreementbenefits under any Benefit Plan (including any equity-based awards), except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by any such Benefit Plan or provided in this Agreement; or
(xx) agree, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts authorize or commit to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier do any of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing.
Appears in 2 contracts
Sources: Merger Agreement (Straight Path Communications Inc.), Merger Agreement (Straight Path Communications Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from After the date of this Agreement through and prior to the earlier of the Closing or Effective Time and the termination of this AgreementAgreement in accordance with its terms, except (1i) to the extent as Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, delayed or conditioned and such consent to be deemed given if Parent provides no written response within 3 business days after a written request by the Company for such consent) or delayed)request, (2ii) as otherwise expressly contemplated by this Agreement, (iii) as required by applicable Laws, (iv) as set forth in Section 4.1(a) 5.1 of the Company Disclosure Schedule, Letter or (3v) as may be required by applicable Legal Requirementsnecessary to comply with the express obligations of any Company Material Contract in effect on the date hereof (the exceptions described in the foregoing clauses (i) through (v), or (4) as expressly required by this Agreementeach, a “General Exception”), the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its and its Subsidiaries’ business in the ordinary course of businessbusiness consistent with past practice, and, to the extent consistent therewith, it shall, and it shall cause its Subsidiaries to, use its and their respective commercially reasonable efforts to preserve their business organizations; provided that any provided, that, no action expressly permitted by the remaining provisions Company or any of this its Subsidiaries with respect to matters specifically addressed by any provision of Section 4.1(a5.1(b) shall be deemed a breach of Section 5.1 unless such action or omission would constitute a breach of such provision of Section 5.1(b).
(including Section 4.1(ab) Without limiting the generality of and in furtherance of the Company Disclosure Schedule) will not constitute a violation of foregoing but subject to the foregoing. During the period proviso in Section 5.1(a), from the date of this Agreement through until the earlier of the Closing or Effective Time and the termination of this AgreementAgreement in accordance with its terms, except pursuant to a General Exception, the Company will not and will not permit its Subsidiaries to:
(i) adopt any change in the Company’s or any Subsidiary’s certificate of incorporation or bylaws or comparable governing documents;
(ii) merge or consolidate itself or any of its Subsidiaries with any other Person (except for any such transaction among its wholly owned subsidiaries), restructure, reorganize or completely or partially liquidate;
(iii) other than (A) in connection with the exercise, vesting or settlement of Company Equity Awards outstanding as of the date hereof and in accordance with the terms thereof (including sales of Shares in order to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xviisatisfy tax withholding obligations) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth disclosed in Section 4.1(a5.1(b)(iii) of the Company Disclosure ScheduleLetter, (C) as may be required by applicable Legal Requirementsissue, sell, pledge, dispose of, grant, transfer or encumber, or (D) as expressly required authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance by this Agreementit or any of its Subsidiaries of, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents shares of its capital stock or amend the Organizational Documents of any Company Subsidiaryits Subsidiaries (other than the issuance of shares by its wholly-owned Subsidiary to it or another of its wholly-owned Subsidiaries), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iiiiv) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any of its capital stock (except for dividends paid by any direct or indirect wholly-owned Subsidiary to it or to any other direct or indirect wholly-owned Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(v) other than (A) acquisitions of Shares tendered by holders of Company Equity Awards outstanding as of the date hereof and in accordance with the terms thereof, in order to satisfy obligations to pay the exercise price and/or tax withholding obligation with respect thereto, and (B) the acquisition by the Company of Shares in connection with the forfeiture of Company Equity Awards, reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of the Company’s capital stock or securities convertible or exchangeable into or exercisable for any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiarystock;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwisevi) (A) incur any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted indebtedness for as cash equivalents), (C) any business borrowed money or division guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or of any of its Subsidiaries, except for (Dx) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory indebtedness incurred in the ordinary course of business under its credit agreements and facilities as in effect on the date of this Agreement, including under the Sub Debt Facility or (32) inbound licenses or other grants or assignments of Intellectual Property in as necessary to operate the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services business in the ordinary course of business in a manner consistent with past practice practices, or of obsolete equipment or assets (y) interest rate swaps on customary commercial terms, (B) except for credit default protection provided in connection with services and products in the ordinary course of business consistent with past practice; , enter into any “keep well” or other Contract to maintain any financial statement condition of any other Person (Bother than any of its Subsidiaries) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for enter into any borrowings permitted by Section 4.1(a)(viii); arrangement having the economic effect of any of the foregoing clause (A) or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practiceB);
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except as may be required by GAAP or any other securities applicable accounting standard (including the Current Expected Credit Loss accounting standard), make any material changes with respect to accounting policies or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable awardprocedures;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(AA) settle or compromise any material Tax claim, audit, or assessment for an amount materially in excess of the amount reserved or accrued on the Audited Company Balance Sheet (or most recent consolidated balance sheet included in the Company Reports), (B) make, change or revoke any material Tax election, material method of Tax accounting or any annual Tax accounting period, (C) amend any material Tax Returns or terminate file claims for material Tax refunds, or (D) enter into any material closing agreement, surrender in writing any right to claim a material Tax refund, offset or other reduction in Tax liability or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or its Subsidiaries;
(ix) transfer, sell, lease, exclusively license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse (except with respect to patents expiring in accordance with their terms) or expire or otherwise dispose of any of its material assets, product lines or businesses or of its Subsidiaries, including capital stock of any of its Subsidiaries, except (A) in connection with services and products provided in the ordinary course of business consistent with past practice and sales of obsolete assets, (B) incurrence of Permitted Liens, (C) for terminations assets with a fair market value not in excess of $350,000 in the aggregate, in the ordinary course of business consistent with past practice, or (D) pursuant to Contracts in effect prior to the expiration date of this Agreement;
(x) other than (A) as set forth on Section 5.1(b)(x) of the existing term of any Material Contract) any Material Contract Company Disclosure Letter, or (B) waive, release or assign as required by any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if Company Benefit Plan in effect on the date of this Agreement, would constitute a Material Contract;
(xi1) change materially increase any of its methods of financial accounting compensation or accounting practices in benefit provided or to be provided to any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change current or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, former employee or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation service provider of the Company or any of its Subsidiaries, (2) enter into or adopt any new Company Subsidiary Benefit Plan or (B) dissolution, merger, consolidation, division, restructuring, recapitalization amend in any material respect or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned terminate any Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, Benefit Plan except for settlements routine amendments or compromises other than (A) the payment, discharge or satisfaction, renewals of health and welfare plans in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B3) authorize accelerate the disclosure to any third party funding or vesting of any material Trade Secret included compensation or benefit;
(xi) except in the Company IP in a way that results in loss of trade secret protection, other than connection with services and products provided in the ordinary course of business in a manner consistent with past practice;
(xxi) take practices or cause pursuant to Contracts, copies of which shall be taken any actionpublicly filed with the SEC or shall have been provided to Parent, or knowingly fail in effect prior to take or cause to be taken any actionthe date of this Agreement, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning acquire, by merger, consolidation, acquisition of Section 368(a) of the Code stock or assets, or otherwise, any business or Person or division thereof or (B) result except in favor of its Subsidiaries, make any loans, advances, or capital contributions to or investments in any Person (other than advances of the conditions expenses to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business employees in the ordinary course of business. Parent agrees that, during business and loans and other credit products to and for the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except Company’s commercial counterparties);
(xii) other than (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business consistent with past practice or (B) as permitted under Section 5.1(b)(iii), 5.1(b)(v) or 5.1(b)(x), enter into or amend or modify in any material respect, or consent to the termination of (other than at its stated expiry date), any Company Material Contract or any Lease with respect to material real property or any other Contract or Lease that, if in effect as of the date hereof would constitute a Company Material Contract or Lease with respect to material real property hereunder;
(xiii) settle or compromise any Action involving the payment of monetary damages by the Company or any of its Subsidiaries of any amount exceeding $350,000 in the aggregate (not including any amounts payable or reimbursable by insurance), other than (A) any Action brought against or by Parent, Merger Sub, Sponsor or any of their respective Affiliates and Financing Sources arising out of a breach or alleged breach of this Agreement, the Confidentiality Agreement, the Equity Commitment Letter or the Limited Guarantee, and (B) the settlement of claims, liabilities, or obligations specifically reserved against on the Audited Company Balance Sheet (or most recent consolidated balance sheet included in the Company Reports) in an amount not in excess of the specific reserve with respect to such claim, liability or obligation; provided, that, neither the Company nor any of its Subsidiaries shall settle or agree to settle any Action which settlement involves a conduct remedy or injunctive or similar relief that has a material restrictive impact on the Company’s business; ;
(3xiv) inbound licenses enter into any material agreement, agreement in principle, letter of intent, memorandum of understanding, or other grants similar Contract, in each case with respect to any joint venture, strategic partnership, or assignments alliance (excluding, for avoidance of Intellectual Property doubt, strategic relationships not involving equity, alliances, reseller agreements, and relationships that are commercial in nature);
(xv) terminate or modify in any material respect, or fail to exercise renewal rights with respect to, any material insurance policy except in the ordinary course of businessbusiness or if such material insurance policy is replaced by a substantially comparable policy; or
(xvi) agree, authorize or commit to do any of the foregoing.
(c) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the operations of the Company or its Subsidiaries prior to the Effective Time in violation of applicable Law. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations.
Appears in 2 contracts
Sources: Merger Agreement (Elevate Credit, Inc.), Merger Agreement (Elevate Credit, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from From and after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent Effective Time, unless Purchaser has consented in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreementthereto, the Company shall, and shall cause the Company each of its Subsidiaries to:
(i) conduct their respective businesses and operations only in its usual, regular and ordinary course of business consistent with past practice;
(ii) use commercially their reasonable efforts to conduct its (A) preserve intact their business organizations, (B) maintain in effect all existing material qualifications, licenses, permits, approvals and other authorizations referred to in Section 5.1 and Section 5.12, (C) keep available the ordinary course services of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) officers and key employees of the Company Disclosure Scheduleand each Subsidiary, and (D) will not constitute a violation preserve existing relationships with material customers and suppliers and those Persons having business relationships with them;
(iii) promptly upon the discovery thereof notify Purchaser of the existence of any breach of any representation or warranty contained herein (or, in the case of any representation or warranty that makes no reference to Company Material Adverse Effect, any breach of such representation or warranty in any material respect) or the occurrence of any event that would cause any representation or warranty contained herein no longer to be true and correct (or, in the case of any representation or warranty that makes no reference to Company Material Adverse Effect, to no longer be true and correct in any material respect);
(iv) promptly deliver to Purchaser copies of any report, statement or schedule filed with the SEC subsequent to the date of this Agreement.
(b) Without limiting the generality of the foregoing. During the period , from and after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent Effective Time, unless Purchaser has consented in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementthereto, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents propose to its stockholders or amend its certificate of incorporation or bylaws or comparable governing instruments, except for any amendment required in connection with the Organizational Documents performance by the Company or its Subsidiaries of any Company Subsidiarytheir respective obligations under this Agreement;
(ii) splitgrant, combineissue, subdividesell, changepledge, exchangeencumber, amend the terms of transfer, deliver or reclassify register for issuance or sale any shares of capital stock or other ownership interest in the Company (other than issuances of Common Stock pursuant to (A) the exercise of Options outstanding on the date hereof or (B) the conversion of any Class B Common Stock outstanding on the date hereof into Class A Common Stock) or any of its Subsidiaries (other than issuances of capital stock of the Company’s Subsidiaries pursuant to the exercise of Options outstanding on the date hereof), or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of capital stock stock, ownership interest or other equity interests convertible or exchangeable securities; or accelerate any right to convert or exchange or acquire any securities of the Company (other than Options pursuant to Sections 4.2(d) and 5.2(c)) or any Company Subsidiaryof its Subsidiaries for any such shares or ownership interest;
(iii) declareeffect any stock split, set asidecombination, make reclassification or pay conversion of any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s its capital stock or otherwise change its capitalization as it exists on the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiarydate hereof;
(iv) acquire (by mergerdirectly or indirectly redeem, consolidation, operation of law, acquisition of stock, other equity interests purchase or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Personotherwise acquire, or (D) any material assets exceptoffer to redeem, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestscapital stock of any of its Subsidiaries, other than shares of Company Common Stock issuable by repurchasing restricted stock or upon the cashless exercise of outstanding options, in each case in the ordinary course of business;
(v) sell, lease, license, encumber or otherwise dispose of any of its assets (including Intellectual Property of the Company Optionsor its Subsidiaries or capital stock of any of its Subsidiaries), except in the ordinary course of business (excluding capital stock of its Subsidiaries);
(vi) except in connection merge with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of acquire (by merger, consolidation, operation acquisition of lawstock or assets, joint venture or otherwise of a direct or indirect ownership interest or investment) in one transaction or a series of related transactions any Person, for an aggregate consideration in excess of $1.0 million, any equity interests or other securities of any Person, any division or otherwise), business of any material Company IP Person or material tangible all or substantially all of the assets of any Person;
(vii) incur or assume any indebtedness for borrowed money, issue or sell any debt securities of the CompanyCompany or any of its Subsidiaries or assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other than: Person (A) sales except wholly owned Subsidiaries of inventory, goods the Company or services in the ordinary course of business up to $1.0 million), in a manner any such case in excess of $1.0 million, except for the incurrence of indebtedness for working capital purposes in the ordinary course of business under the Company’s or its Subsidiaries’ existing credit facilities and capital expenditures made in accordance with the Company’s or its Subsidiaries’ previously adopted capital budgets, copies of which have been provided to Purchaser;
(viii) make or forgive any loans, advances or capital contributions to, or investments in, any other Person;
(ix) (A) enter into any new employment, severance, consulting or salary continuation agreements with any newly hired employees other than in the ordinary course of business or enter into any of the foregoing with any existing officers or directors or alter or amend in any way, except as may be required by Law or pursuant to any Contract or commitment in existence as of the date hereof, any compensation or benefits due to employees other than increases or new incentive awards in the ordinary course of business consistent with past practice practices; (B) except as required by Law or of obsolete equipment any existing Company Employee Plan or assets Material Contract or in the ordinary course of business consistent with past practice, increase the amount of compensation of or grant new incentive awards to any director or officer of the Company or any of its Subsidiaries other than annual restricted stock granted to directors; (BC) except as required by Law, a Material Contract existing on the date hereof or pursuant to written Contracts a Company severance policy or commitments Company Employee Plan existing as on the date hereof, grant any severance or termination pay to any director or officer of the date Company or any of its Subsidiaries; (D) except as required by Law, adopt any additional employee benefit plan; (E) except as required by any existing Company Employee Plan or agreement thereunder, provide for the payment of any amounts as a result of the consummation of the transactions contemplated by this Agreement; or (CF) as security for pay any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan bonuses except to the extent permitted by clauses (B), (C), (D) earned under existing awards or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth new incentive awards listed in Section 4.1(a)(ix5.10(h)(i)(6) of the Company Disclosure ScheduleLetter;
(x) except adopt or amend in the ordinary course of business, (i)(A) amend any material respect or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract employee benefit plan or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contractarrangement;
(xi) change make any material changes in the type or amount of their insurance coverage or permit any material insurance policy naming the Company or any of its methods of financial accounting Subsidiaries as a beneficiary or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change a loss payee to be canceled or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, terminated other than in the ordinary course of business;
(xii) except as required by changes in applicable Law or GAAP, agree to an extension change any accounting methods, principles or waiver of practices used by the statute of limitations with respect to a material amount of TaxesCompany or its Subsidiaries, in each case, as concurred by its independent public accountants;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting settle, pay or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impairdischarge, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, investigation, arbitration, proceeding or other claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period obligation arising from the date conduct of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course for an amount in excess of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company$1.0 million, except for any such transaction involving only wholly owned Parent Subsidiaries;
settlement, payment or discharge by FTD, Inc. and ▇▇▇.▇▇▇ Inc. of their obligations under that certain Stipulation and Agreement of Compromise, Settlement and Release, dated as of August 4, 2003 (iiithe “Stipulation”) declareentered into in settlement of the consolidated shareholder class actions entitled “In re ▇▇▇.▇▇▇, set asideInc. Shareholders Litigation,” Delaware ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇-▇▇, make provided, that the Settlement (as defined in the Stipulation) has not been and shall not be changed or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest altered in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division material way since the date of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesssuch Stipulation;
Appears in 2 contracts
Sources: Merger Agreement (FTD Inc), Merger Agreement (FTD Inc)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, (4) in connection with any COVID-19 Measures or (45) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable best efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of consistent in all material respects with past practice and to maintain and preserve intact its business organization and maintain satisfactory relationships with customers, suppliers and distributors and other Persons with whom the Company Disclosure Schedule) will not constitute a violation of or any Company Subsidiary has material business relations. Without limiting the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such which consent shall not to be unreasonably withheld, conditioned or delayed), (B2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (C3) as may be required by applicable Legal Requirements, Requirements or (D4) as expressly permitted or required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):), in each case by merger, consolidation, division, operation of law, or otherwise:
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiarySubsidiary of the Company;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)Person, (C) any business or division of another Personbusiness, or (D) any material assets exceptassets, except (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; Subsidiaries of the Company, (2) the purchase of equipment, services, supplies and inventory in the ordinary course of business consistent with past practice, or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessbusiness consistent with past practice;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Subsidiary of the Company Subsidiary or among any wholly owned Company SubsidiariesSubsidiaries of the Company, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of Company Options or the vesting of Company RSUs, in each case, to the extent such Company Options or Company RSUs are outstanding Company Optionsas of the date of this Agreement and such exercise or settlement is in accordance with the terms thereof;
(vi) except as expressly contemplated by this Agreement, take any action to accelerate the vesting of any Assumed Company Option or any Assumed Company RSU Award (other than to implement any existing agreements or arrangement for such acceleration in effect as of the date of this Agreement and set forth on the Company Disclosure Schedule);
(vii) except in connection with any transaction between the Company and any wholly owned Subsidiary of the Company Subsidiary or among any wholly owned Company SubsidiariesSubsidiaries of the Company, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrancesencumber, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP IP, Material Communications Permit, or right conferred thereby, or material tangible assets of the CompanyCompany (including any Company Owned Real Property), other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this AgreementAgreement and set forth in Part 4.1(a)(vii) of the Company Disclosure Schedule; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) non-exclusive licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practicepractice or (D) dispositions of assets which do not constitute Company IP, and with respect to which the fair market value of all such assets does not exceed $500,000 in the aggregate;
(viiviii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of options to purchase Company Options Common Stock pursuant to the Company Equity Plans or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company OptionsOptions and Company RSUs, as applicable, in accordance with the terms of the applicable award;
(viiiix) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or advances or capital contributions to any other Person, except for for: (1) repayment of indebtedness and reborrowings of such repaid amounts under the Existing Company Credit Facility in accordance with the terms thereof; (2) letters of credit, bank guarantees, security or performance bonds or similar credit support instruments at any time, not to exceed $2,000,000 in the ordinary course of business consistent with past practice; (3) advancement obligations under the Organizational Documents of the Company or the Company Subsidiaries or indemnification agreements with the Company or the Company Subsidiaries and (4) any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Subsidiaries of the Company Subsidiaries (and guarantees by the Company or the Company its Subsidiaries in respect thereof);
(ixx) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix)Plan, (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Boarddirector, independent contractor or current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Boardcurrent or former director, independent contractor or current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to above the level of Vice President or abovewhose annual base compensation exceeds $250,000, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 above the level of Vice President (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including as permitted by means the terms of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the Company Plans in effect on the date of this Agreement or as otherwise expressly contemplated by this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual promotion of employees below the level of Vice President in the ordinary course of business in a manner consistent with past practiceand whose annual base compensation does not or will not (after giving effect to any such promotion) exceed $250,000; and (4) increases in the grant of annual equity awards and payment of cash incentive compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ixas contemplated by Part 4.1(a)(x) of the Company Disclosure Schedule;
(xxi) except for renewals or extensions of any existing Material Contract entered into in the ordinary course of businessbusiness consistent with past practice, (i)(A) materially amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material ContractContract (other than Contracts entered into with Top Customers or Top Suppliers in the ordinary course of business consistent with past practice);
(xixii) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xiixiii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change or adopt any Tax accounting period or material method of Tax accounting, amend any material Tax Company Return if such amendment would reasonably be expected to result in a material Tax liability, file any material Tax Return prepared in a manner materially inconsistent with past practice, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes “closing agreement” within the meaning of Section 7121 of the Code (or any similar state, local or non-U.S. Legal Requirement) if such agreement would reasonably be expected to result in a material Tax liabilityliability or have a material impact on Taxes, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of businessbusiness consistent with past practice, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiiixiv) sell, transfer, assign, license, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), or mortgage, encumber or exchange any material Intellectual Property owned, or purported to be owned, by the Company or any Subsidiary of the Company, including, for the avoidance of doubt, any sale, transfer, assignment, license, or other disposition of, or mortgage, encumbrance or exchange of any such material Intellectual Property to or with any Affiliate of the Company (other than consignment of Company Products non-exclusive licenses granted in the ordinary course of business), or modify, amend, cancel, terminate, waive, release or assign any Company IP License or any rights, claims, obligations or benefits thereunder or enter into any Contract that would have been a Company IP License had it been entered into prior to the Effective Time, in each case, with respect to any nonmaterial Company IP License, except in the ordinary course of business;
(xv) make any aggregate capital expenditure that is not expenditures in excess of one hundred ten percent (110%) of the amounts contemplated by the annual capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiiiPart 4.1(a)(xv) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000Schedule;
(xivxvi) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders stockholders other than the Company Shareholder Stockholder Meeting or (B) any other meeting of the Company’s shareholders stockholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby; provided, that nothing in this clause (xvi) shall prevent the Company from holding its annual meeting of stockholders for the election of directors and such other matters that shall be required to be brought before any such meeting under any applicable law, rule or regulation or that shall be brought before any such meeting by a stockholder of the Company who complies with the requirements of Section 1.3 of the bylaws of the Company;
(xvxvii) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersstockholders;
(xvixviii) adopt a plan of (A) complete or partial liquidation of the Company or any Subsidiary of the Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xviixix) commence, settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than that (A) the payment, discharge or satisfaction, involve solely monetary remedies with a value not in excess of $500,000 in the ordinary course of business in a manner consistent with past practiceaggregate to be paid by the Company and its Subsidiaries, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief restriction on the Company’s business or the business of the Company or any Company Subsidiary (other than confidentiality obligations)Subsidiaries, (yC) involve do not relate to any litigation, claim, suit, action or proceeding by the payment of money greater than $100,000 Company’s stockholders in excess of existing insurance coverage, connection with this Agreement or the Merger and (zD) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviiixx) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (Axxi) amend or terminate any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permitsrespect;
(xxxxii) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxiixxiii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses “(i) )” through “(xxi) xxii)” of this Section 4.1(a)sentence.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section Part 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, (4) in connection with any COVID-19 Measures or (45) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable best efforts to conduct its business in the ordinary course of businessconsistent in all material respects with past practice and to maintain and preserve intact its business organization. Parent agrees thatWithout limiting the foregoing, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent the Company shall otherwise give its prior consent in writingwriting (which consent shall not be unreasonably withheld, conditioned or delayed), (B2) as set forth in Section Part 4.1(b) of the Parent Disclosure Schedule, (C3) as may be required by applicable Legal Requirements, Requirements or (D4) as expressly permitted or required by this Agreement, Parent and Acquisition Sub shall not (and shall not permit any Parent Subsidiary to):), in each case by merger, consolidation, division, operation of law, or otherwise:
(i) amend Parent’s or either of the Acquisition Subs’ Sub’s Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessadv
Appears in 2 contracts
Sources: Merger Agreement (RigNet, Inc.), Merger Agreement (Viasat Inc)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date of this Agreement and prior to the Effective Time (unless Parent shall otherwise approve in writing, and except as otherwise expressly contemplated by this Agreement) and except as required by applicable Laws, the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Authorities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of its and its Subsidiaries’ present employees and agents. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except (A) as otherwise expressly required by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned withheld or delayed), ) or (2C) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shall, will not and shall cause will not permit its Subsidiaries to:
(i) adopt or propose any change in its Certificate of Formation or By-Laws or other applicable governing instruments;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person, use commercially reasonable efforts except for any such transactions among wholly-owned Subsidiaries of the Company, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations or businesses;
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $250,000 in any transaction or series of related transactions, other than acquisitions pursuant to conduct Company Contracts in effect as of the date of this Agreement;
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of the Company or any of its business Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(v) create or incur any Lien material to the Company or any of its Subsidiaries not incurred in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreementbusiness consistent with past practice, except for any Permitted Liens;
(vi) (A) make any loan or loan commitment to the extent Parent shall otherwise give its prior consent in writing (in the case any Person which would, when aggregated with all outstanding loans or loan commitments or any renewals or extensions thereof made to such Person and any Affiliate or immediate family member of subsections (iv)such Person, (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned exceed $500,000 or delayed), (B) purchase or sell any loan or loan participation, individually or in bulk, in one or a series of related transactions in excess of $500,000 in the aggregate, in each case, without first informing the deputy chief credit officer of Hanmi Bank two (2) full Business Days prior to taking such action and considering in good faith his views and receiving the approval of United Central Bank’s Chief Executive Officer, at a minimum, and any committee as set forth in Section 4.1(a) of required by United Central Bank’s current loan authority policy and administration. Neither the Company Disclosure Schedulenor any of its Affiliates shall forgive any loans to directors, (C) as may be required by applicable Legal Requirements, officers or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryemployees;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to or declare or make any shares distribution on, any of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivviii) acquire (except to make changes that are required by mergerapplicable Law or to satisfy contractual obligations existing as of the date hereof which are listed on Section 6.1(a)(viii) of the Company Disclosure Letter, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) terminate, enter into, amend or renew (or communicate any intention to take such action) any Benefit Plans, other Personthan routine amendments to health and welfare plans (other than severance plans) that do not increase benefits or result in materially increased administrative costs, (B) grant any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business salary or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestswage increase, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except annual increases in connection with any transaction between the Company salary and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except wages for Company Permitted Encumbrances, or otherwise dispose of (employees who are not officers by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services no more than 5% in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets aggregate in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or , (C) as security for pay any borrowings permitted by Section 4.1(a)(viii); bonus or incentive compensation in excess of the amount earned based on actual performance, (D) licenses granted to customers grant any new award, amend the terms of outstanding awards or other third parties change the compensation opportunity under any Benefit Plan, (E) set any bonus metrics or targets, (F) pay any severance in excess of payments by the Company or its Subsidiaries made in the ordinary course of business in a manner consistent with past practice;
, (viiG) directly take any action to fund or indirectly repurchasesecure the payment of any amounts under any Benefit Plan, redeem (H) change any assumptions used to calculate funding or otherwise acquire contribution obligations under any shares Benefit Plan, other than as required by GAAP (I) hire any employee or consultant with annualized cash compensation opportunities in excess of the Company’s or any Company Subsidiary’s capital stock or equity interests$150,000, or any other securities or obligations convertible (currently or after the passage than to fill vacancies of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; persons who are not officers or (BJ) shares terminate any officer or other person with an annual compensation opportunity in excess of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur ($150,000 other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)“cause”;
(ix) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
(x) incur any indebtedness for borrowed money or assume, guarantee, endorse or otherwise as an accommodation become responsible for the long-term indebtedness of any other Person (other than (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation deposits and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President similar liabilities in the ordinary course of business in a manner consistent with past practice; practice (4B) increases in compensation or benefits required pursuant indebtedness of the Company’s Subsidiaries to any the Company Plan in effect on and (C) short term advances from the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are Federal Home Loan Bank in the ordinary course of business in a manner consistent with past practice; and );
(6xi) any other actions except as set forth in the capital budgets set forth in Section 4.1(a)(ix6.1(a)(xi) of the Company Disclosure ScheduleLetter and consistent therewith, make or authorize any capital expenditure in excess of $250,000 in the aggregate during any twelve (12) month period;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (iixii) enter into any contract that would have been a Material Contract or agreement that, if in effect on the date of had it been entered into prior to this Agreement, would constitute a Material Contract;
(xixiii) change make any of its methods of financial changes with respect to accounting policies or accounting practices in any material respect other than procedures, except as required by changes in GAAP;
(xiixiv) make enter into any settlement, compromise or similar agreement with respect to, any action, suit, proceeding, order or investigation before a Governmental Authority, individually or with respect to multiple actions, suits, proceedings, orders or investigations arising generally out of the same set of facts or circumstances, for an amount greater than $250,000 in excess of applicable and confirmed insurance coverage or specific loss reserves reflected on the Company Interim Financial Statements, or any obligation or liability of the Company in excess of such amount, or would impose any material restriction on the business of Parent or the Surviving Corporation or create adverse precedent for claims that are reasonably likely to be material to Parent, the Company or the Surviving Corporation;
(except for elections made xv) amend, modify or terminate any Material Contract, or cancel, modify or waive any material debts or claims held by it or waive any rights having in each case a value in excess of $500,000 other than any loan restructures or workouts in the ordinary course of businessbusiness and following prior consultation with the deputy chief credit officer of Hanmi Bank;
(xvi) sell, transfer, lease, license, guarantee, mortgage, pledge, encumber or otherwise create any Lien on, dispose of or discontinue any of its assets, deposits, business or properties (other than sales of loans and loan participations pursuant to Section 6.1(a)(vi)) except in the ordinary and usual course of business consistent with past practice and in a transaction that, together with all other such transactions, is not material to the Company and its Subsidiaries, taken as a whole;
(xvii) except as required by applicable Law or the Federal Reserve Board, the FDIC, the CDBO or the TDB, (A) implement or adopt any material change in its interest rate and other risk management policies, procedures or practices, (B) fail to follow in all material respects, the Company’s or its applicable Subsidiary’s existing policies or practices with respect to managing its exposure to interest rate and other risk or (C) fail to use commercially reasonable efforts to avoid any material increase in the Company’s aggregate exposure to interest rate risk;
(xviii) take any action or omit to take any action that is reasonably likely to result in any of the conditions to the Merger set forth in Article VII not being satisfied;
(xix) (A) other than in accordance with the Company’s or any of its Subsidiaries’ investment policies in effect on the date hereof or in securities transactions as provided in (B) below, make any investment either by contributions to capital, property transfers or purchase of any property or assets of any Person or (B) other than purchases of direct obligations of the United States of America or obligations of United States government agencies which are entitled to the full faith and credit of the United States of America, in any case with a remaining maturity at the time of purchase of one year or less, purchase or acquire securities of any type; provided, however, that the Company shall notify Parent of the purchase of any investment security in writing within one (1) Business Day after such purchase, and such notice shall describe in detail the investment securities purchased and the price thereof), and provided, further, that the Company shall consult with Parent from time to time regarding the Company’s investment securities policies and consider in good faith the views of Parent with respect thereto.
(xx) (A) commence or settle any litigation or proceeding with respect to any liability for material Taxes, take any action which is reasonably likely to have an adverse impact on the Tax position of the Company or, after the Merger, which is reasonably likely to have an adverse impact on the Tax position of Parent or the Surviving Corporation, (B) except in the ordinary and usual course of business consistent with past practice, make or change or revoke any material express or deemed Tax election, file any amended Tax Return or change any of its methods of reporting income or deductions for Tax accounting period purposes or material method (C) take any other action with respect to Taxes that is outside the ordinary and usual course of Tax accountingbusiness or inconsistent with past practice;
(xxi) make application for the opening, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityrelocation or closing of any, settle or compromise any material liability for Taxes open, relocate or close any, branch office, loan production office or other significant office or operations facility of it or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, its Subsidiaries;
(xxii) enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund new line of Taxes, business or, other than in the ordinary course of businessbusiness consistent with past practice, agree to an extension change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies, as applicable (including any change in the maximum ratio or waiver similar limits as a percentage of the statute of limitations its capital exposure applicable with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make its loan portfolio or any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”segment thereof), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements Law or the Company’s Organizational Documentspolicies imposed by any Governmental Authority; or
(xxiii) agree, convene (A) authorize or commit to do any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;foregoing.
(xvb) enter into Prior to making any agreement, understanding written or arrangement with respect oral communications to the voting of any capital stock directors, officers or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation employees of the Company or any Company Subsidiary of its Subsidiaries pertaining to compensation or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in benefit matters that are affected by the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required contemplated by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) provide Parent with a copy of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreementintended communication, Parent shall not (have a reasonable period of time to review and shall not permit any comment on the communication, and Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except shall cooperate in each case, providing any such mutually agreeable communication.
(1c) acquisitions by Parent from shall not knowingly take or permit any wholly owned Parent Subsidiary or among of its Subsidiaries to take any wholly owned Parent Subsidiaries; (2) action that is reasonably likely to prevent the purchase consummation of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessMerger.
Appears in 2 contracts
Sources: Agreement and Plan of Merger (Hanmi Financial Corp), Merger Agreement (Hanmi Financial Corp)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through until the earlier of the Closing or Effective Time and the termination of this Agreement, except Agreement in accordance with Article VI (1except: (i) to the extent if Parent shall otherwise give its prior consent approve in writing (writing, such consent approval not to be unreasonably withheld, conditioned or delayed, (ii) as otherwise expressly required by this Agreement, (iii) as expressly set forth in Section 4.1(a) of the Company Disclosure Letter, (iv) as required by applicable Laws or any Governmental Entity or (v) with respect to any COVID-19 Measures to the extent reasonably necessary for the operation of the Company), the business of the Company and its Subsidiaries shall be conducted, in all material respects, in the ordinary course of business (including, for the avoidance of doubt, consistent with recent past practice in light of COVID-19) and applicable Law. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with Article VI, except (A) as otherwise contemplated or required by this Agreement, (B) as Parent may approve in writing (such approval not to be unreasonably withheld, delayed or conditioned), (2C) as required by applicable Laws or any Governmental Entity or (D) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shallwill not, and shall cause will not permit its Subsidiaries, to:
(i) adopt any amendments to its charter or by-laws or other applicable governing instruments;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person, use commercially reasonable efforts to conduct or restructure, reorganize or completely or partially liquidate the Company or any of its business in Subsidiaries, except for any such transactions solely among Subsidiaries of the Company;
(iii) acquire assets or capital stock outside of the ordinary course of business; provided that business from any action expressly permitted by other Person with a value or purchase price in the remaining provisions aggregate in excess of this Section 4.1(a$5,000,000 in any transaction or series of related transactions;
(iv) (including Section 4.1(a) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of capital stock of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except any its Subsidiaries (other than (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xviipermitted under Section 4.1(xiv) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed)below, (B) as set forth the issuance of Shares upon the settlement of Restricted Shares and Performance Shares outstanding on the date of this Agreement in Section 4.1(aaccordance with their terms on the date of this Agreement, or (C) the issuance of shares of capital stock by a Subsidiary of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirementsto the Company or another Subsidiary of the Company), or (D) as expressly required by this Agreementsecurities convertible or exchangeable into or exercisable for any shares of such capital stock, the Company shall not (and shall not permit or any Company Subsidiary to):
(i) amend the Company’s Organizational Documents options, warrants or amend the Organizational Documents other rights of any Company Subsidiarykind to acquire any shares of such capital stock or such convertible, exchangeable or exercisable securities;
(iiv) splitmake any loans, combine, subdivide, change, exchange, amend the terms of advances or reclassify capital contributions to or investments in any shares of the Company’s capital stock or Person (other equity interests of than the Company or any Company Subsidiarydirect or indirect Subsidiary of the Company) in excess of $2,000,000 in the aggregate;
(iiivi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly owned direct or indirect Subsidiary of the Company Subsidiary to the Company or another wholly owned Company Subsidiaryto any other direct or indirect Subsidiary of the Company);
(ivvii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (other than, to the extent required by mergerthe Stock Plan or any award outstanding on the date hereof, consolidation, operation of law, the acquisition of stock, other equity interests any Shares tendered by current or assets, formation former employees or directors in order to pay Taxes in connection with the settlement of a joint venture Restricted Shares or otherwisePerformance Shares);
(viii) (A) incur any other Person, (B) any equity interest in any other indebtedness for borrowed money or guarantee such indebtedness of another Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsa Subsidiary of the Company), (C) or issue or sell any business debt securities or division warrants or other rights to acquire any debt security of another Person, or (D) any material assets except, (1) acquisitions by the Company from or any wholly owned Company Subsidiary or among any wholly owned Company of its Subsidiaries; (2) the purchase of equipment, supplies and inventory except for indebtedness for borrowed money incurred in the ordinary and usual course of business pursuant to the Existing Credit Facility and that can be repaid without penalty on or prior to the Closing Date or issuances of letters of credit under the Company’s revolving credit facility;
(3ix) inbound licenses make or authorize any capital expenditure in excess of $2,500,000 in the aggregate, other grants or assignments of Intellectual Property than expenditures relating to internally developed software in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign make any material rights under any Material Contractschanges with respect to accounting policies or procedures, except as required by changes in GAAP or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material ContractGovernmental Entity;
(xi) change settle any Actions before a Governmental Entity for an amount payable by the Company or any of its methods Subsidiaries in excess of financial accounting $2,500,000 or accounting practices for any commitment, obligation or liability of the Company in any material respect other than as required by changes in GAAPexcess of such amount;
(xii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change any Tax accounting period period, adopt or change any material method of Tax accountingaccounting method, amend any material Tax Return if such amendment would reasonably be expected to result Return, enter into any closing agreement in a material Tax liabilityrespect of Taxes, settle or compromise any material liability or claim for Taxes Taxes, or surrender any material claim for a refund of Taxes;
(xiii) except for transactions among the Company and its Subsidiaries or among the Company’s Subsidiaries, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any assets or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, in each case which are material to the Company and its Subsidiaries taken as a whole, other than equipment, inventory, supplies and other assets in the ordinary course of business and other than pursuant to Contracts in effect prior to the date of this Agreement;
(xiv) except as required pursuant to the terms of any existing Benefit Plan or Contract in effect prior to the date of this Agreement and made available to Parent, or as otherwise required by applicable Laws, (A) grant or provide any severance or termination payments or benefits to any director, officer or other employee of the Company or any Tax auditof its Subsidiaries, claimexcept in the ordinary course of business or consistent with past practice or pursuant to existing Contracts, (B) increase or decrease the compensation or make any new equity awards to any director, officer or other employee of the Company or any of its Subsidiaries, except in the ordinary course of business or consistent with past practice, or (C) establish, adopt, enter into, terminate or materially amend or modify any Benefit Plan (or any arrangement that would be a Benefit Plan if in effect on the date hereof), other than changes that are made in connection with the annual renewal of group welfare benefit contracts in the ordinary course of business or consistent with past practice that do not materially increase the costs to the Company or any of its Subsidiaries of any such Benefit Plan; or
(xv) (i) negotiate, modify, extend, or enter into any Labor Agreement or (ii) recognize or certify any labor union, labor organization, works council, employee representative or group of employees as the bargaining representative for any employees of the Company or its Subsidiaries;
(xvi) implement or announce any employee layoffs, plant closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other actions that would be reasonably likely to implicate the WARN Act;
(xvii) hire, engage, terminate (without cause), furlough, or temporarily layoff any employee or independent contractor with annual base compensation in excess of $250,000;
(xviii) waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other proceeding relating to a material amount restrictive covenant obligation of Taxes, any current or former employee or independent contractor;
(xix) enter into or adopt any agreement “poison pill” or similar stockholder rights plan, in each case, applicable to the Merger and the other transactions contemplated by this Agreement;
(xx) amend or modify in any material respect, waive any material rights under, terminate (other than in the ordinary course of business or any termination in the accordance with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a the terms of an existing Material Contract that occurs automatically), release, settle or compromise any material Tax liabilityclaim, request liability or obligation under any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, Material Contract or enter into (other than in the ordinary course of business, agree ) any contract which if entered into prior to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider have been a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceMaterial Contract;
(xxi) take or cause to be taken enter into any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent new line of business outside the Merger from qualifying as a reorganization within the meaning of Section 368(a) existing business of the Code or (B) result in any Company and its Subsidiaries as of the conditions to the Mergers set forth in ARTICLE V not being satisfied; ordate of this Agreement;
(xxii) authorizeabandon, approve or enter into any agreement or make any commitment sell, assign, license, permit to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirementslapse, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents dispose of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent SubsidiaryIntellectual Property, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory non-exclusive licenses granted in the ordinary course of business; or
(3xxiii) inbound licenses agree, authorize or other grants or assignments commit to do any of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1The Parties agree as follows with respect to the period from and after the execution of this Agreement.
(a) The Company shall not knowingly take or permit any of its Subsidiaries to take any action or refrain from taking any action the result of which would be reasonably and foreseeably likely to prevent the consummation of the Merger by the Termination Date. Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the Effective Time, unless Parent shall otherwise approve in writing, and except as otherwise expressly contemplated by this Agreement or as required by applicable Laws, the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of Company and its Subsidiaries, maintain the validity of the Communications Licenses and, except as disclosed in Section 5.1 of the Company Disclosure Letter, comply in all material respects with all requirements of the Communications Licenses and the rules and regulations of the FCC and State PUCs. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement through until the earlier of the Closing or the termination of this AgreementEffective Time, except (1A) to the extent Parent shall as otherwise give its prior consent expressly required by this Agreement or as permitted in writing (such consent not to be unreasonably withheld, conditioned or delayedSection 5.6(d), (2B) as Parent may approve in writing, (C) as set forth in Section 4.1(a5.1(a) of the Company Disclosure ScheduleLetter and (D), in the case of any of the following clauses in this Section 5.1(a), as may be expressly permitted by another of the following clauses in this Section 5.1(a), the Company will not and will not permit its Subsidiaries to:
(1) except for the Articles Amendment, adopt or propose any change in its articles of incorporation or by-laws or other applicable governing instruments or amend any term of the Company Shares;
(2) merge or consolidate Company or any of its Subsidiaries with any other Person, except for any such transactions among wholly owned Subsidiaries of Company that are not obligors or guarantors of third-party indebtedness, or adopt a plan of liquidation;
(3) acquire assets outside of the Ordinary Course of Business from any other Person with a value or purchase price in excess of $50,000 in the aggregate, other than acquisitions pursuant to Contracts to the extent in effect immediately prior to the execution of this Agreement and as may otherwise set forth in Section 5.1(a)(3) of the Company Disclosure Letter, and other than capital expenditures as permitted by Section 5.1(a)(12);
(4) (x) enter into any material line of business in any geographic area other than the current lines of business of Company or any of its Subsidiaries, and in the geographic areas where they are currently conducted, as of the date hereof or (y) engage in the conduct of any business in any state that would require the receipt or transfer of a Communications License;
(5) file for any License outside of the Ordinary Course of Business;
(6) other than as set forth in Section 5.1(a)(6) of the Company Disclosure Letter and other than the issuance of shares of Common Stock upon exercise of Employee Stock Options or Warrants or conversion of shares of Preferred Stock outstanding as of the date of this Agreement, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of Company or any its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of Company to Company or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(7) other than (i) in connection with receivables facilities and securitizations as in effect on the date hereof and disclosed in the Company Disclosure Letter and renewals thereof in the Ordinary Course of Business, (ii) in connection with the refinancing of Company’s indebtedness under its credit facility as in effect on the date hereof and disclosed in the Company Disclosure Letter, (iii) Liens created or incurred to secure the purchase price of assets acquired as permitted by Section 5.1(a)12) and (iv) Liens described in clause (ii), (iii), (iv), (v) or (vi) of Section 3.8, create or incur any Lien on any assets of the Company or any of its Subsidiaries;
(8) other than loans and advances to employees of Company or its Subsidiaries in the Ordinary Course of Business and not in excess of $10,000 at any time outstanding to any employee, make any loans, advances or capital contributions to or investments in any Person (other than Company or any direct or indirect wholly owned Subsidiary of Company);
(9) declare, set aside or pay any dividend or distribution with respect to Company’s capital stock (whether in cash, stock or property or any combination thereof) or redeem, purchase or acquire any of its capital stock;
(10) reclassify, split, combine, subdivide or repurchase, redeem or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
(11) other than (i) in connection with receivables facilities and securitizations as in effect on the date hereof and disclosed in the Company Disclosure Letter and renewals thereof in the Ordinary Course of Business, (ii) in connection with the refinancing of Company’s indebtedness under its credit facility as in effect on the date hereof and disclosed in the Company Disclosure Letter, and (iii) indebtedness incurred to finance the capital expenditures permitted by Section 5.1(a)(12) and guarantees thereof, incur any indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries;
(12) except for the capital expenditures set forth in Section 5.1(a)(12) of the Company Disclosure Letter and asset acquisitions otherwise permitted by Section 5.1(a)(3) (without giving effect to the exception therein for capital expenditures as permitted by this clause (12)), make or authorize any capital expenditure;
(13) enter into any contract or other agreement (x) that would have been a Material Contract as described in Section 3.18 (d), (f) or (g) had it been entered into prior to the date of this Agreement, (y) other than in the Ordinary Course of Business, that involves annual consideration in excess of $50,000 or (z) that involves annual consideration in excess of $250,000 and is not terminable by Company and its Subsidiaries without additional payment or penalty (including by any acceleration of remaining amounts), upon not more than 90 days’ notice;
(14) make any changes with respect to accounting policies or procedures, except as required by changes in GAAP or by applicable Laws or except as Company, based upon the advice of its independent auditors after consultation with Parent, determines in good faith is advisable to conform to best accounting practices;
(15) settle any litigation or other proceedings before or threatened to be brought before a Governmental Entity for an amount to be paid by Company or any of its Subsidiaries in excess of $25,000 or that would be reasonably likely to have any adverse impact on the operations of Company or any of its Subsidiaries;
(16) other than in the Ordinary Course of Business, (i) amend or modify in any material respect adverse to Company or its Subsidiaries, or terminate or waive any material right or benefit of Company or its Subsidiaries under, any Material Contract, or (ii) cancel, modify or waive any debts or claims held by it or waive any rights;
(17) sell, lease, license or otherwise dispose of any assets of Company or its Subsidiaries except (i) in the Ordinary Course of Business or obsolete assets or (ii) as set forth in Section 5.1(a)(17) of the Company Disclosure Letter;
(18) except as (x) required pursuant to existing written, binding agreements in effect prior to the date of this Agreement or as otherwise required by applicable Legal RequirementsLaws, (y) set forth in Section 5.1(a)(18) of the Company Disclosure Letter or (z) the costs and expenses of which will be a Transaction Expense or Severance Amount, (i) enter into any commitment to provide any severance or termination benefits to (or amend any existing arrangement with) any director, officer or employee of Company or any of its Subsidiaries, other than for severance or termination benefits to employees (other than officers) in the Ordinary Course of Business consistent with past practice and pursuant to the terms of plans, programs or arrangements in effect prior to the date of this Agreement and disclosed on Section 3.18 or 3.25 of the Company Disclosure Letter, (ii) increase the benefits payable under any existing severance or termination benefit policy or employment agreement (other than as required to be increased pursuant to the existing terms of any such policy or agreement or as a result of ordinary pay raises or promotions), (iii) enter into any employment, severance, change in control, termination, deferred compensation or other similar agreement (or amend any such existing agreement) with any director, officer or employee of the Company or any of its Subsidiaries other than pursuant to the terms of any plan or agreement in effect on the date hereof and disclosed on Section 3.18 or 3.25 of the Company Disclosure Letter, (iv) establish, adopt, amend or terminate any employee or director compensation or other benefit, employment or severance plan, program or agreement (including Employee Benefit Plans, each, a “Compensation Plan”), except for technical amendments in the Ordinary Course of Business, provided that such amendments do not materially increase the cost of such arrangements to Company, (v) increase the compensation, bonus or other benefits of, make any new awards under any Compensation Plan to, or pay any bonus to any director, officer, employee, consultant or independent contractor of the Company or any of its Subsidiaries, except for increases, new awards or payments in the Ordinary Course of Business for employees who are not officers of Company, (vi) take any action to fund or in any other way secure the payment of compensation or benefits under any Compensation Plan, except as required pursuant to the terms thereof as in effect as of the date of this Agreement, (vii) take any action to accelerate the vesting or payment of any compensation or benefits under any Compensation Plan, to the extent not already required in any such Compensation Plan, or (4viii) enter into any collective bargaining agreements; provided, however, that the prohibitions contained in the foregoing clauses (i) and (v) shall not apply in connection with newly hired or newly promoted employees, in each case to the extent consistent with past practice;
(19) take any action that may reasonably be expected to jeopardize the validity of any of the Communications Licenses or result in the revocation, surrender or any adverse modification of, forfeiture of, or fail to renew under regular terms, any of the Communications Licenses, (b) fail to prosecute with due diligence any pending applications with respect to the Communications Licenses, including any renewals thereof, and (c) with respect to Communications Licenses, fail to make all material filings and reports and pay all material fees necessary or reasonably appropriate for the continued operation of the Business, as and when such approvals, consents, permits, licenses, filings, or reports or other authorizations are necessary or appropriate or (d) fail to initiate appropriate steps to renew any material Licenses held by Company or any of its Subsidiaries that are scheduled to terminate prior to or within 60 days after the Effective Time or to prosecute any pending applications for any material License; or
(20) agree or commit to do any of the foregoing.
(b) Parent shall not knowingly take or permit any of its Subsidiaries to take any action or refrain from taking any action the result of which would be reasonably and foreseeably likely to prevent the consummation of the Merger by the Termination Date. Without limiting the generality of the foregoing, from the date of this Agreement until the Effective Time, except (A) as otherwise expressly required by this Agreement, the (B) as Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent may approve in writing or (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (BC) as set forth in Section 4.1(a5.1(b) of the Company Parent Disclosure ScheduleLetter, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall Parent will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i1) amend the Companyadopt or propose any material change in Parent’s Organizational Documents certificate of incorporation or by laws or other applicable governing instruments or amend any term of the Organizational Documents shares of any Company SubsidiaryParent Stock;
(ii2) split, combine, subdivide, change, exchange, amend the terms of merge or reclassify any shares of the Company’s capital stock consolidate Parent or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) Merger Sub with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business sell all or division substantially all of another Person, Parent’s assets or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase adopt a plan of equipment, supplies and inventory in the ordinary course liquidation of business or Parent;
(3) inbound licenses enter into or other grants acquire any new line of business that (i) is material to Parent and its Subsidiaries taken as a whole and (ii) is not strategically related to the current business or assignments operations of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company Parent and any wholly owned Company Subsidiary or among any wholly owned Company its Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi4) except for shares of Parent Stock issued for fair value in connection with any transaction between arm’s length transactions and other than the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any issuance of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets shares in the ordinary course of business consistent with past practice; (B) practices pursuant to written Contracts Parent employee benefit plans, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or commitments existing as authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of Parent or any of its Subsidiaries (other than the date issuance of this Agreement; shares by a wholly owned Subsidiary of Parent to Parent or (C) as security another wholly owned Subsidiary of Parent), or securities convertible or exchangeable into or exercisable for any borrowings permitted by Section 4.1(a)(viii); shares of such capital stock, or (D) licenses granted to customers any options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or other third parties in the ordinary course rights of business in a manner consistent with past practiceany kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(vii5) directly declare, set aside or indirectly pay any dividend or distribution (whether in cash, stock or property or any combination thereof) on any shares of Parent Stock or on any shares of capital stock of any Subsidiary, other than by wholly owned Subsidiaries;
(6) reclassify, split, combine or subdivide, or repurchase, redeem or otherwise acquire at prices above fair market value, directly or indirectly, any shares of the Company’s or any Company Subsidiary’s its capital stock or equity interests, securities convertible or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) exchangeable into or exchangeable exercisable for any shares of the Company’s or any Company Subsidiary’s its capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedstock; or
(xxii7) authorize, approve agree or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The Except (i) as described in Section 5.1(a) of the Company Disclosure Letter, (ii) as otherwise expressly required or permitted by this Agreement or any other Transaction Document, (iii) as required by applicable Law (including COVID-19 Measures) or (iv) as TSIA shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through the earlier of until the Closing or valid termination of this Agreement, the Company shall use commercially reasonable efforts to operate the business of it and its Subsidiaries in the ordinary course consistent with past practice and to preserve their business organizations intact and maintain existing relations with all of the Company’s customers, suppliers, creditors and employees.
(b) Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the Closing or valid termination of this Agreement, except (1w) to as described in the extent Parent corresponding subsection of Section 5.1(b) of the Company Disclosure Letter, (x) as otherwise expressly required or permitted by this Agreement or any other Transaction Document, (y) as required by applicable Law (including COVID-19 Measures) or (z) as TSIA shall otherwise give its prior consent to in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed), the Company will not and will not permit its Subsidiaries to:
(2i) as set forth adopt or propose any change in Section 4.1(aits or its Subsidiaries’ Organizational Documents;
(ii) merge or consolidate itself or any of its Subsidiaries with any other Person, except for any such transactions among its wholly owned Subsidiaries, or restructure, reorganize, dissolve or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on substantially all of its assets, operations or businesses;
(A) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $2,000,000, or acquire any business or Person, by merger or consolidation, purchase of substantially all assets or equity interests or by any other manner, in each case, in any transaction or series of related transactions, other than acquisitions or other transactions pursuant to Contracts to which the Company Disclosure Schedule, (3) or any of its Subsidiaries are a party that are in effect as may be required by applicable Legal Requirementsof the date of this Agreement, or (4B) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business other than in the ordinary course of business; provided that , consistent with past practice, enter into any action expressly permitted by the remaining provisions of this Section 4.1(ajoint venture or similar long-term business combination with another Person;
(iv) (including Section 4.1(a) of other than pursuant to Contracts to which the Company Disclosure Schedule) will not constitute or any of its Subsidiaries are a violation party that are in effect as of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any of its material assets, properties, licenses, operations, rights, product lines, businesses or interests therein, except for (A) to the extent Parent shall otherwise give its prior consent in writing (sales or other dispositions in the case ordinary course of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), business consistent with past practice and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth sales, leases, licenses or other dispositions of assets with a fair market value not in Section 4.1(a) excess of $5,000,000 in the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryaggregate;
(iiv) splitexcept pursuant to awards granted under the Company Stock Plans, combineissue, subdividesell, changepledge, exchangedispose of, amend grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of the Company Subsidiaryto the Company or another wholly owned Subsidiary of the Company), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock;
(iiivi) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock, except in connection with the net exercise or settlement of awards under the Company Stock Plans;
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of enter into any Company Subsidiary, other than dividends or distributions only agreement with respect to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting of its capital stock;
(ivviii) acquire (by mergermake any material loans, consolidationadvances, operation of law, acquisition of stock, other equity interests guarantees or assets, formation of a joint venture capital contributions to or otherwise) (A) any other Person, (B) any equity interest investments in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or any direct or indirect wholly owned Subsidiary of the Company), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property than in the ordinary course of business;
1 Note (ix) incur any indebtedness for borrowed money or guarantee any such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to W&S: Subject to ongoing review by the Company.
(v) except in connection with acquire any transaction between debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice; , not to exceed $2,000,000 in the aggregate;
(Bx) make or commit to make capital expenditures other than in an amount not in excess of the amount set forth on Section 5.1(b)(x) of the Company Disclosure Letter, in the aggregate;
(xi) enter into any Contract that would have been a Company Material Contract (for the purposes of this Section 5.1(b)(xi), not including the types of Contracts set forth in Sections 3.17(a)(i), 3.17(a)(ii), 3.17(a)(iii), 3.17(a)(iv), 3.17(a)(ix) (other than Contracts of the type described in Section 3.17(a)(ix) pursuant to written which an exclusive license of Company Intellectual Property is granted, or any other Contract of the type described in Section 3.17(a)(ix) entered into outside of the ordinary course of business), 3.17(a)(xi) (other than Contracts entered into outside of the ordinary course of business) and 3.17(a)(xiv)) had it been entered into prior to the date of this Agreement;
(xii) amend, modify, fail to renew or commitments existing terminate any Company Material Contract or waive or release any material rights, claims or benefits under any Company Material Contracts (for the purposes of this Section 5.1(b)(xii), not including the types of Contracts set forth in Sections 3.17(a)(i), 3.17(a)(ii), 3.17(a)(iii), 3.17(a)(iv), 3.17(a)(ix) (other than Contracts of the type described in Section 3.17(a)(ix) that are amended, modified, failed to be renewed or terminated outside of the ordinary course of business), 3.17(a)(xi) (other than Contracts amended, modified, failed to be renewed or terminated outside of the ordinary course of business) and 3.17(a)(xiv));
(xiii) make any material changes with respect to its accounting policies or procedures, except as required by changes in Law or GAAP;
(xiv) settle any Proceeding, except where such settlement is covered by insurance or involves only the payment of monetary damages directly from the Company in an amount not more than $1,000,000 in the aggregate;
(xv) Make, revoke or change any material Tax election in a manner inconsistent with past practice, file any material amended Tax Return, adopt or change any material Tax accounting method or period, enter into any agreement with a Governmental Entity with respect to material Taxes, settle or compromise any examination, audit or other action with a Governmental Entity of or relating to any material Taxes or settle or compromise any claim or assessment by a Governmental Entity in respect of material Taxes, or enter into any Tax sharing or similar agreement (excluding any commercial contract not primarily related to Taxes), in each case to the extent such action could reasonably be expected to have any adverse impact that is not immaterial on TSIA, the Company or any of the Company’s Subsidiaries;
(xvi) take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment;
(xvii) except as required pursuant to the terms of any Company Benefit Plan in effect as of the date of this Agreement or as required by Law, (A) increase in any manner the compensation or consulting fees, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any Company Employee (including executive officers) with an annual salary or wage rate or consulting fees and target annual cash bonus opportunity in excess of $270,000 as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend consistent with past practice, become a party to, establish, adopt, amend, commence participation in or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under Company Benefit Plan or any Material Contracts, or (ii) enter arrangement that would have been a Company Benefit Plan had it been entered into any Contract or agreement that, if in effect on the date of prior to this Agreement, would constitute a Material Contract;
(xiC) change grant any new awards, or amend or modify the terms of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (outstanding awards under the Stock Plans or, except for elections made in the ordinary course of business), change consistent with past practice, under any Company Benefit Plan, (D) except in the ordinary course of business, consistent with past practice, take any action to accelerate the vesting or revoke lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, (E) forgive any loans or issue any loans (other than routine travel advances issued in the ordinary course of business) to any Company Employee, (F) hire any employee or engage any independent contractor (who is a natural person) with annual salary or wage rate or consulting fees and target annual cash bonus opportunity in excess of $270,000 or (G) terminate the employment of any executive officer other than for cause;
(xviii) sell, assign, lease, license, pledge, encumber, divest, abandon or otherwise dispose of, allow to lapse or expire, or fail to protect, any material Tax electionCompany Intellectual Property, change other than grants of non-exclusive licenses in the ordinary course of business;
(xix) amend or fail to comply with the Company and its Subsidiaries’ existing privacy and security policies, or alter the operation or security of any Tax accounting period IT Assets owned, used or material method held for use in the operation of Tax accountingthe Company and its Subsidiaries businesses, amend any material Tax Return if such amendment would reasonably be expected to result in each case, (A) in a material Tax liability, settle or compromise manner that would be materially less protective of any material liability for Taxes such IT Assets or any Tax audit, claim, Trade Secrets or other proceeding relating to a material amount Personal Information in the possession or control of Taxes, enter into the Company or any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, its Subsidiaries and (B) other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay become a party to, establish, adopt, amend, commence participation in or enter into any issuance, renewal, maintenance and collective bargaining or other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practicelabor union Contract;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business keep current and in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirementsfull force and effect, or (D) as expressly permitted to comply with the requirements of, or required by this Agreementto apply for or renew, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s permit, approval, authorization, consent, license, registration or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid certificate issued by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities Governmental Entity that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets is material to the conduct of the business of the Company and the Company its Subsidiaries, taken as a whole, except in each case, ;
(1xxii) acquisitions by Parent from file any wholly owned Parent Subsidiary prospectus supplement or among registration statement or consummate any wholly owned Parent Subsidiaries; (2) offering of securities that requires registration under the purchase of equipment, supplies and inventory Securities Act or that includes any actual or contingent commitment to register such securities under the Securities Act in the ordinary course future;
(xxiii) fail to maintain, cancel or materially change coverage under, in a manner materially detrimental to the Company or any of businessits Subsidiaries, any insurance policy maintained with respect to the Company and its Subsidiaries and their assets and properties;
(xxiv) enter into any material new line of business outside of the business currently conducted by the Company and its Subsidiaries as of the date of this Agreement; or
(3xxv) inbound licenses agree, authorize or other grants or assignments commit to do any of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Sources: Merger Agreement (TS Innovation Acquisitions Corp.)
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through and until the Effective Time or the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2w) as set forth in Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3x) as may otherwise expressly contemplated or permitted by this Agreement (including Section 6.17), (y) to the extent consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned) or (z) as required by applicable Legal Requirements, or (4) as expressly required by this AgreementLaw, the Company shall, and shall cause the Company its Subsidiaries to, use commercially reasonable best efforts to conduct cause the business of it and its business Subsidiaries to be conducted in the ordinary course of business; provided that any action expressly permitted by business and it shall, and shall cause its Subsidiaries to, use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations with Governmental Entities, customers, suppliers, distributors, employees and business associates. Notwithstanding the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation generality of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) and subject to the extent Parent shall otherwise give its prior consent exceptions set forth in writing clause (w), clause (x), clause (y) (it being understood that in the case of subsections the below clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayedxiv), (Bxv), (xvii), (xix), (xx), (xxi), (xxii), (xxiii), (xxiv), (xxv) as set forth and, with respect to actions contemplated by such clauses, the below clause (xxvi), Parent’s consent may be withheld for any reason in Section 4.1(aits sole discretion) and clause (z) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementimmediately preceding sentence, the Company shall not (and shall not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents articles of incorporation, bylaws or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests comparable governing documents of the Company or any Company Subsidiaryof its Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(ivii) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests stock or assets, formation of a joint venture assets or otherwise) (Aany corporation, partnership or other business organization or any business(es) any other Person, (B) any equity interest in from any other Person (in any transaction or series of related transactions, other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)acquisitions of inventory, (C) any business or division of another Personsupplies, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses materials or other grants assets or assignments of Intellectual Property products in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by (iii) merge or consolidate with any other Person or restructure, reorganize or completely or partially liquidate the Company.Company or any of its Subsidiaries;
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of capital stock or securities convertible, exchangeable or exercisable therefor (collectively, “Equity Interests”) of the Company or any of its Subsidiaries (including Restricted Shares or Share Equivalent Units);
(v) except declare, set aside, establish a record date for, or pay any dividends on or make any other distributions (whether payable in connection with cash, stock, property or a combination thereof) in respect of any transaction between of the Company and capital stock, other than any dividends from any wholly owned Subsidiary of the Company Subsidiary to the Company or among any to another wholly owned Subsidiary of the Company, notwithstanding anything to the contrary in this Agreement or the Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company OptionsDisclosure Letter;
(vi) reclassify, split, combine, subdivide, repurchase, redeem or otherwise acquire, directly or indirectly, any of the Equity Interests, except for repurchases, redemptions or acquisitions in connection with the vesting or forfeiture of Restricted Shares;
(vii) except as contemplated by the terms of this Agreement, (A) incur, issue or modify in any transaction between material respect the Company and terms of any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third partyIndebtedness for borrowed money (including Indebtedness in respect of capital leases), or incur assume, prepay (except as required pursuant to the terms of any Lien on any of its material tangible property Indebtedness currently outstanding), defease, cancel, acquire, guarantee or tangible assets, except for Company Permitted Encumbrancesendorse, or otherwise dispose of become responsible for (by mergerwhether directly or indirectly, consolidation, operation of law, division contingently or otherwise), the Indebtedness of any material Company IP Person, (B) issue or material tangible assets sell any debt securities or warrants or other rights to acquire any debt security of the CompanyCompany or any of its Subsidiaries or (C) assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person for borrowed money (in each case, for the avoidance of doubt, excluding trade payables, or obligations issued or assumed as consideration for services or property, including inventory), except for (1) Indebtedness incurred under the Amended and Restated Credit Agreement, dated as of April 28, 2011, by and among the Company and certain of its Subsidiaries, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent and U.S. collateral agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent, J.▇. ▇▇▇▇▇▇ Europe Limited, as European administrative agent and European collateral agent, Citibank, N.A., as syndication agent and Bank of America, N.A., W▇▇▇▇ Fargo Capital Finance, LLC and Suntrust Bank, as documentation agents (the “Revolving Credit Facility”), (2) letters of credit issued pursuant to the Revolving Credit Facility or otherwise issued in the ordinary course of business, (3) interest rate, foreign currency and other than: (A) sales of inventory, goods or services hedging arrangements on customary commercial terms in the ordinary course of business and (4) Intercompany Indebtedness incurred in the ordinary course of business;
(viii) grant or incur any Lien material to the Company and its Subsidiaries, other than (A) Permitted Encumbrances; (B) pledges or deposits by the Company or any of its Subsidiaries in the ordinary course of business under workmen’s compensation Laws, unemployment insurance Laws or similar Laws; (C) good faith deposits in connection with Contracts (other than for the payment of Indebtedness) to which the Company or one of its Subsidiaries is a manner consistent party, in each case, in the ordinary course of business; (D) Liens that may be incurred or granted pursuant to or in accordance with past practice the terms of any Indebtedness in effect as of the date hereof, securing any Indebtedness permitted pursuant to Section 6.1(a)(vii) or (E) pursuant to licenses or sublicenses of obsolete equipment Intellectual Property granted in the ordinary course of business;
(ix) notwithstanding anything to the contrary elsewhere in this Agreement or assets the Company Disclosure Letter (other than Section 6.1(a)(ix) of the Company Disclosure Letter), except as required pursuant to agreements and Company Plans in effect prior to the date of this Agreement (and disclosed on the Company Disclosure Letter), or as otherwise required by applicable Law, (A) grant, pay or agree to pay any severance or termination payments or any similar benefits to any current or former director, officer or employee of the Company or any of its Subsidiaries, (B) increase the compensation or bonus (or grant, pay or agree to pay bonuses) to, or modify any bonus arrangements or bonus targets for, any current or former director, officer or employee of the Company or any of its Subsidiaries, (C) increase the welfare benefits of any current or former director, officer or employee of the Company or any of its Subsidiaries, except for across the board changes in welfare benefits for the employee population as a whole in the ordinary course of business consistent with past practice; , (BD) pursuant establish, adopt, terminate or materially amend any Company Plan or materially amend the terms of any Restricted Shares or Share Equivalent Units or amend any of the performance criteria relative to written Contracts the terms of any Restricted Shares in any respect, or commitments enter into any new, or amend any existing change in control arrangements or retention, retirement or similar agreements with any new, current or former director, officer or employee of the Company or any of its Subsidiaries or increase pension benefits for any such person, (E) accelerate the vesting or payment of or take action to fund, any compensation payable or benefits to become payable or provided to any current or former director, officer or employee of the Company or any of its Subsidiaries, except as otherwise provided in this Agreement, (F) enter into any new, or amend any existing, employment agreements with any new, current or former director, officer or employee of the Company or any of its Subsidiaries except in the case of persons who first become employees after the date of this Agreement; Agreement and who will not be executive officers of the Company, new employment agreements in the ordinary course of business consistent with past practice and with an annual base salary and incentive compensation opportunity not to exceed $250,000, (G) grant or make any equity awards that may be settled in Shares, preferred shares, or any Equity Interest or any other securities of the Company or any of its Subsidiaries, or the value of which is linked directly or indirectly, in whole or in part, to the price or value of any Shares, preferred shares, Equity Interests or other Company securities or Subsidiary securities or (H) hire or otherwise employ any person that would become an executive officer of the Company or would otherwise be entitled to an annual base salary and incentive compensation opportunity in excess of $250,000;
(x) other than in the ordinary course of business, (A) make or change any material Tax election, (B) change the Company’s or any Subsidiary of the Company’s method of accounting for Tax purposes, (C) as security for file any borrowings permitted by Section 4.1(a)(viii); or material amended Tax Return, (D) licenses granted settle, concede, compromise or abandon any material Tax claim or assessment, (E) surrender any right to a refund of material Taxes or (F) consent to any extension or waiver of the limitation period applicable to any claim or assessment with respect to material Taxes;
(xi) except as required by GAAP, a Governmental Entity or applicable Law, make any material changes to accounting policies or principles;
(xii) make any loans, advances or capital contributions to, or investments in, any Person (including in any joint venture, whether or not now existing), other than (A) to or in the Company or to or in any direct or indirect controlled wholly-owned Subsidiary of the Company, (B) to or in franchise partners, distributors or wholesale customers or other third parties in the ordinary course of business in a manner consistent an aggregate amount of less than $1,000,000, (C) any loans, advances, capital contributions or investments that are contemplated under the heading “Fixture Spend 2014” in the quarterly capital expenditure budgets attached to Item 2 of Section 6.1(a)(xv) of the Company Disclosure Letter and (D) loans, advances, capital contributions or investments in connection with past practiceS▇▇▇▇▇ ▇▇▇▇▇▇▇▇ store buildout contributions;
(viixiii) directly or indirectly repurchasesubject in any event to clauses (xxiii), redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests(xxiv) and (xxv) below, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of enter into any Contract that would have been a Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company Material Contract pursuant to the exercise subsections (C), (D), (E), (F), (G), (J), (K) or (M) of repurchase rights existing Section 5.1(q)(i) had it been entered into prior to the date of this Agreement; or , (B) shares terminate, materially amend or waive any material rights under (x) any Company Material Contract or any Contract that would have been a Company Material Contract had it been entered into prior to the date of this Agreement, in each case in a manner materially adverse to the Company Common Stock accepted as payment for the exercise price and its Subsidiaries, excluding any termination upon expiration of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, a term in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) Material Contract or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6y) any other actions Contract set forth in Items 15 through 18, inclusive, of Section 4.1(a)(ix5.1(q)(i)(G) of the Company Disclosure Schedule;
Letter, (xC) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign waive any material rights under any Material Contractsdefault under, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityrelease, settle or compromise any material claim against the Company or liability for Taxes or obligation owing to the Company, under any Tax auditCompany Material Contract, claim, or other proceeding relating to a material amount of Taxes, (D) enter into any agreement Contract which contains a change in control or similar provision that pursuant to its terms would require a payment to the other party or parties thereto in connection with a Governmental Entity relating the Merger or the other Transactions (including in combination with any other event or circumstance) or any subsequent change in control of the Company or any of its Subsidiaries, (E) amend or modify the letter of engagements of the Company’s financial advisors in any manner that materially increases the fees or commissions payable by the Company, or increase the fees or commissions payable by the Company to Taxes if such agreement would reasonably the Company’s financial advisors by reason of any discretionary compensation that might otherwise be expected awarded by the Company, (F) incur or pay any fees or expenses to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, the Company’s or its Subsidiaries’ legal or accounting service providers other than as set forth in Section 5.1(r) of the Company Disclosure Letter or (G) amend or modify in any material respect or terminate any Material Real Property Lease, or enter into any new lease that would have been a Material Real Property Lease had it been in effect as of the date hereof, in either case, except in the ordinary course of business, agree to an extension or waiver enter into any Contract for the purchase or sale of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000real property;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (Aset forth on subsection 6.1(a)(xiv) any special meeting of the Company’s shareholders Company Disclosure Letter, transfer, sell, lease, license, assign, mortgage, pledge, divest, discontinue or otherwise dispose of any entity or assets, brands, product lines, operations, rights or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, in each case either (x) having a current value of $1 million for all such transactions in the aggregate or (y) involving GRI, B▇▇▇▇ ▇▇▇▇▇▇, R▇▇▇▇▇ ▇▇▇ or R▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ brands, operations and/or businesses and/or any other brands, operations and/or businesses with at least $1 million in annual revenue, other than sales of inventory, supplies and product in the Company Shareholder Meeting or (B) any other meeting ordinary course of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebybusiness;
(xv) enter into any agreement, understanding or arrangement with respect to except for the voting of any expenditures contemplated by the capital stock or other equity interests budgets set forth in Section 6.1(a)(xv) of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement Disclosure Letter or for expenditures required by Law or in connection with the granting of revocable proxies in connection with response to casualty loss or property damage, make or authorize any meeting of the Company’s shareholderscapital expenditures;
(xvi) adopt a plan without limiting the terms and conditions of Section 6.16, waive, release, settle or compromise any pending or threatened litigation, arbitration, claim (excluding ordinary course disputes with vendors in which no litigation or arbitration commences) or action against the Company or any of its Subsidiaries other than settlements or compromises of any litigation, arbitration, claim or action (A) complete where the amount paid in an individual settlement or partial liquidation compromise by the Company (and not including any amount paid by the Company’s insurance carriers or third parties) does not exceed the amount set forth in Section 6.1(a)(xvi) of the Company Disclosure Letter and (B) that would not impose any material restrictions on the business or operations of the Company or its Subsidiaries; provided that the foregoing clause (A) will not restrict the Company’s ability to settle any ordinary course claim involving a settlement amount not in excess of the amount set forth in Section 6.1(a)(xvi) of the Company Subsidiary or Disclosure Letter (so long as clause (B) is satisfied);
(xvii) adopt, enter into a plan of, or consummate, any complete or partial liquidation, dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in reorganization of the case Company or any of clause (B), transactions between or among direct or indirect wholly owned Company its Subsidiaries;
(xviixviii) settle or compromise any litigationfail to maintain in full force and effect material insurance policies covering the Company and its Subsidiaries and their respective properties, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business assets and businesses in a manner form and amount consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on unless the Company determines in its reasonable commercial judgment that the form or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of such insurance coverage or fail to renew or maintain any material existing insurance policiesshould be modified;
(xix) (A) amend close any stores, other than as set forth in the store closure plan attached as Annex 1 to Section 6.1(a) of the Company Permits in a manner that adversely impacts Disclosure Letter (the Company’s ability to conduct its business in any material respect or “Store Closure Plan”), (B) terminate with respect to the timing of any store closure listed in the Store Closure Plan, take any action or allow fail to lapse take any action that results in a material Company Permitsdeviation from the timing of any such store closure as set forth in the Store Closure Plan, (C) with respect to any store closure listed in the Store Closure Plan, commit to incur (or incur) any lease breakage costs or similar amounts materially in excess of the amount set forth on the Store Closure Plan with respect to such store closure or (D) consolidate or shutdown any distribution or supply chain facility;
(xx) (A) fail to pay effect or permit any issuanceplant closing or layoff of employees that would require notice under the Worker Adjustment and Retraining Notification Act of 1988, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancelas amended, or permit to lapse any material Company Registered IPsimilar foreign, other than in its reasonable business judgment state or in the ordinary course of business in a manner consistent with past practicelocal law, regulation or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceordinance;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesstake,
Appears in 1 contract
Sources: Merger Agreement (Jones Group Inc)
Interim Operations. 1
(a) The Company agrees and Parent, each covenant and agree as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Effective Time (unless Parent or the termination of this AgreementCompany, except (1) to the extent Parent as applicable, shall otherwise give its prior consent approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed)), its business and its Subsidiaries’ businesses shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of its and its Subsidiaries’ present officers, employees and agents, except as (i) otherwise expressly contemplated or required by this Agreement, (2ii) as required by applicable Law or (iii) set forth in on Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3) as may be required by applicable Legal Requirementsit relates to the Company and its Subsidiaries, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this on Section 4.1(a) (including Section 4.1(a6.1(a) of the Company Parent Disclosure Schedule) will not constitute a violation Letter, as it relates to Parent and its Subsidiaries. Without limiting the generality of and in furtherance of the foregoing. During the period , from the date of this Agreement through until the earlier of the Closing Effective Time, except as (A) expressly contemplated or the termination of required by this Agreement, except (AB) to the extent Parent shall otherwise give its prior consent required by applicable Law, (C) required by any Benefit Plan or collective bargaining agreement, (D) as approved in writing by the Company or Parent (in the case of subsections as applicable) (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned or delayed, in the case of Parent’s approval, with respect to Section 6.1(a)(iv), (Bvi), (x), (xi), (xii), (xvi), (xvii), (xiv), (xx) as or (xxi), and in the case of the Company’s approval, with respect to Section 6.1(a)(iv), (vi), (vii), (x), (xi), (xii), (xix), (xx) or (xxi)) or (E) set forth in on Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (C) as may be required by applicable Legal Requirementsit relates to the Company and its Subsidiaries, or (Don Section 6.1(a) of the Parent Disclosure Letter, as expressly required by this Agreementit relates to Parent and its Subsidiaries, the Company shall each Party, on its own account, will not (and shall will cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend its certificate or articles of incorporation or bylaws or comparable governing documents other than amendments that solely effect ministerial changes to such documents and that would not adversely affect the Company’s Organizational Documents consummation of the Merger or amend the Organizational Documents of any Company Subsidiaryother transactions contemplated by this Agreement;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock stock, property or propertya combination thereof) with respect to any shares of the Company’s capital stock or the its capital stock or other equity interest of any Company Subsidiary, interests (other than dividends or distributions only to the extent paid by any a wholly owned Company Subsidiary of such Party to the Company such Party or another wholly owned Company SubsidiarySubsidiary of such Party);
(iii) except for any transactions among or solely involving a Party’s wholly owned Subsidiaries or among wholly owned Subsidiaries of a Party’s Subsidiaries, merge or consolidate itself or any of its Subsidiaries with any other Person, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its material assets, operations or businesses;
(iv) acquire (assets or businesses, whether by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture purchase or otherwise) (A) any other Person, (B) any equity interest in from any other Person (with a fair market value or purchase price, in the case of the Company, in excess of $2,000,000 individually or $10,000,000 in the aggregate or, in the case of Parent, in excess of $6,000,000 individually or $30,000,000 in the aggregate, in any transaction or series of related transactions, other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)acquisitions of goods, (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, services and supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant pledge, dispose of, grant, transfer, encumber, or otherwise permit to become outstanding any additional shares authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, or securities convertible otherwise enter into any Contract or exchangeable for, or options, warrants or rights understanding with respect to acquirethe voting of, any shares of its capital stock (or equity interests) or of any of its Subsidiaries (other than in respect of equity-based awards outstanding as of the date of this Agreement, in each case in accordance with their terms and the plan documents), or securities convertible or exchangeable into or exercisable for any shares of such capital stock (or equity interests), or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(vi) create or incur any encumbrance on any assets of such Party or any of its Subsidiaries, other than Permitted Liens or encumbrances incurred in connection with the incurrence of Indebtedness to the extent permitted under Section 6.1(a)(x);
(vii) make any loans, advances, guarantees or capital contributions to or investments in any Person, except, in the case of Parent, any such transaction not to exceed $3,000,000 individually or $15,000,000 in the aggregate;
(viii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock (or equity interests) or securities convertible or exchangeable into or exercisable for any shares of its capital stock (or equity interests), other than with respect to (A) the capital stock or other equity interestsinterests of a wholly owned Subsidiary of the Company or Parent, other than as applicable, (B) the acquisition of shares of Company Common Stock issuable upon or Parent Ordinary Shares by the Company or Parent, respectively, that are tendered by holders of equity-based awards to satisfy the obligations to pay the exercise price or Tax withholding obligations with respect to such awards, and (C) the acquisition by the Company or Parent of outstanding Company Optionsequity-based awards in connection with the forfeiture of such awards;
(viix) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third partylease, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, divest or otherwise dispose of (of, whether by merger, consolidation, operation of law, division sale or otherwise), any material Company IP assets, business or material tangible assets a division of any business with a value in the case of the Company, in excess of $2,000,000 individually or $10,000,000 in the aggregate or, in the case of Parent, in excess of $6,000,000 individually or $30,000,000 in the aggregate, in each case other than: (A) than sales of inventory, goods inventory or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; ;
(Bx) pursuant to written Contracts incur, assume, guarantee or commitments existing as otherwise become liable for, prepay, redeem or defease any Indebtedness (including the issuance of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers debt securities, warrants or other third parties rights to acquire any debt security), except for (A) in the case of Parent, Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $30,000,000 individually or $50,000,000 in a manner the aggregate, (B) Indebtedness in replacement of existing Indebtedness for borrowed money on terms substantially consistent with past practice;
or more favorable to Parent than the Indebtedness being replaced, (viiC) directly guarantees of Indebtedness of its wholly owned Subsidiaries otherwise incurred in compliance with this Section 6.1(a)(x) or indirectly repurchase(D) Indebtedness incurred by Parent owed to any of its wholly owned Subsidiaries or by any of Parent’s wholly owned Subsidiaries and owed to Parent or any of its wholly owned Subsidiaries, redeem or otherwise acquire by the Company owed to any shares of its wholly owned Subsidiaries or by any of the Company’s wholly owned Subsidiaries and owed to the Company or any Company Subsidiary’s of its wholly owned Subsidiaries;
(xi) make or authorize any payment of, or accrual or commitment for, capital stock expenditures in excess of $12,000,000, in the case of the Company, or equity interests$45,000,000, in the case of Parent, except (A) any such expenditure to the extent reasonably necessary to avoid a material business interruption as a result of any act of God, war, terrorism, earthquake, fire, hurricane, storm, flood, civil disturbance, explosion, partial or entire failure of utilities or information technology systems, or any other securities similar cause not reasonably within the control of such Party or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interestsits Subsidiaries, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares expenditures that the Company or Parent reasonably determines are necessary to maintain the safety and integrity of any asset or property in response to any unanticipated and subsequently discovered events, occurrences or developments (provided that the Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company OptionsParent, as applicable, in accordance will use its reasonable best efforts to consult with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, Party prior to making or cancel any indebtedness for borrowed money, guarantee agreeing to any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereofexpenditure);
(ixxii) (A) adopt, terminate enter into any Contract or amend other arrangement (other than any Company Plan except Contract that is expressly permitted or contemplated to the extent permitted be entered into by clauses (B), (C), (Dthis Agreement) or (E) of that would have been a Material Contract had it been entered into prior to this Section 4.1(a)(ix)Agreement, (B) increasematerially amend, modify, supplement, waive, terminate, assign, convey or otherwise transfer, in whole or in part, any Material Contract, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant forgive, compromise, cancel, modify or waive any debts or claims held by it or waive any rights to severancehaving in each case of this clause (C) a value in excess of, retention, change in control or termination pay to any member the case of the Company BoardCompany, current employee $1,000,000 individually or former employee of $5,000,000 in the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptaggregate or, in each casethe case of Parent, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President $3,000,000 individually or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President $15,000,000 in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleaggregate;
(xxiii) except enter into or modify any Contract relating to, or otherwise enter into, modify, implement or consummate, a Related Party Transaction;
(xiv) other than in the ordinary course of business, (i)(A) amend settle any action, suit, claim, hearing, arbitration, investigation or terminate (except other proceedings for terminations pursuant to an amount, in the expiration case of the existing term Company, in excess of $1,000,000 individually or $5,000,000 in the aggregate or, in the case of Parent, in excess of $3,000,000 individually or $15,000,000 in the aggregate, or any obligation or liability of it in excess of such amount or on a basis that would result in the imposition of any Material Contract) writ, judgment, decree, settlement, award, injunction or similar order of any Material Contract Governmental Entity that would restrict in a material respect the future activity or (B) waive, release conduct of such Party or assign any material rights under of its Subsidiaries or involve the admission of any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contractcriminal liability;
(xixv) change make any of its methods of changes with respect to financial accounting policies or accounting practices in any material respect other than procedures, except as required by changes in GAAPGAAP or IFRS, as applicable, or any interpretation thereof, including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization, or Law, including pursuant to SEC or AMF rule or policy;
(xiixvi) make (except for elections made other than in the ordinary course of business), make, change or revoke any material Tax election, adopt or change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment accounting method, file any material amended Tax Return, take any action which would reasonably be expected to cause the Parent to be treated as a “domestic corporation” pursuant to Section 7874(b) of the Code as a result in of the Merger, take any action which would reasonably be expected to cause the Company to be treated as an “expatriated entity” within the meaning of Section 7874(a)(2) of the Code as a material Tax liabilityresult of the Merger, settle or compromise any material liability for Taxes or any Tax claim, audit, claimassessment or dispute for an amount materially in excess of the amount reserved or accrued on such Party’s most recent consolidated balance sheet included in such Party’s Reports, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiiixvii) other than consignment in accordance with the terms and regular expiration thereof, terminate or permit any material Company Permit (in the case of the Company) or Parent Permit (in the case of Parent) to lapse or fail to apply on a timely basis (subject to any cure periods) for any renewal of any renewable material Company Products Permit (in the case of the Company) or Parent Permit (in the case of Parent);
(xviii) other than on account of changes in the insurance industry generally in the United States or France, make or agree to any material changes to be made to any insurance policies so as to materially affect the insurance coverage of the Party or its Subsidiaries or assets following the Effective Time;
(xix) enter into, terminate, adopt or amend any employment, change in control or severance agreement or any other Benefit Plan or collective bargaining agreement, except for (A) any amendment to any Benefit Plan (excluding employment, change in control, severance or similar agreement with any individual officer, director or employee) that does not increase the cost of such plan or the benefits provided thereunder to such Party or its Subsidiaries, or (B) actions permitted to be taken by clause (xx) below without the consent of the applicable Party;
(xx) in the case of the Company and its Subsidiaries, (A) increase or change the compensation or benefits payable to any Employees (other than executive officers), other than salary or wage increases for Employees (other than executive officers) in the ordinary course of businessbusiness and consistent with past practice which, make in the aggregate, do not exceed the previous year’s aggregate compensation for all Employees (other than executive officers) by more than 3%, (B) increase or change the compensation or benefits payable to any capital expenditure Employees who are executive officers, (C) pay or grant, or commit to pay or grant any bonus or incentive compensation, (D) grant or accelerate the vesting of any equity-based awards or other compensation or amend or modify the terms of any such outstanding awards, under any Company Benefit Plan, except as provided in this Agreement, (E) grant any transaction or retention bonuses or any discretionary bonus (including bonus plans that exist as of the date hereof), (F) pay annual bonuses or performance bonuses, other than for completed periods based on actual performance through the end of the applicable performance period, or if the Company is contractually obligated to in connection with a termination of employment, (G) increase or change the severance terms applicable to any Employee, (H) terminate the employment or services of any Employee that is not contemplated by more senior than a Senior Vice President, other than for cause, or (I) hire any officer, employee, independent contractor or consultant who has target annual compensation greater than $200,000;
(xxi) in the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) case of the Company Disclosure Schedule and its Subsidiaries, implement any store closures or mass layoff of employees;
(xxii) enter into any new line of business outside of the existing businesses of a “Non-Budgeted Capital Expenditure”)Party and its Subsidiaries;
(xxiii) in the case of Parent, permit Merger Sub to incur any obligation or liability, engage in any business or activity of any type or kind whatsoever or enter into any agreement or arrangement with any Person, except that for obligations incurred in connection with its incorporation, the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by due diligence investigation of the Company and its Subsidiaries or the Company Subsidiaries since negotiation and consummation of this Agreement and the transactions contemplated hereby and thereby; or (xxiv) agree, authorize or commit to do any of the foregoing actions prohibited by clauses (i) through (xxiii) of this
(b) From the date of this Agreement would not, in until the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting earlier of the Company’s shareholders other than Effective Time and the termination of this Agreement in accordance with Article VIII, Parent and the Company Shareholder Meeting shall not take or (B) permit any other meeting of the Company’s shareholders their respective Subsidiaries to consider a proposal take or agree to take any action that would reasonably be expected to impairprevent, prevent materially impair or materially delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)Merger.
(bc) Parent agrees that, during the period from the date of Nothing contained in this Agreement through the earlier of the Closing shall give Parent or the termination Company, directly or indirectly, the right to control or direct the other Party’s operations prior to the Effective Time. Prior to the Effective Time, each Party will exercise, consistent with the terms and conditions of this Agreement, except (1) to complete control and supervision over its and its Subsidiaries’ respective operations. Nothing in this Agreement, including any of the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheldactions, conditioned rights or delayed), (2) as restrictions set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts will be interpreted in such a way as to conduct its business require compliance by any Party if such compliance would result in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents violation of any Parent Subsidiary in rule, regulation or policy of any manner that would be adverse in federal, state, provincial, local or foreign court or Governmental Entity with jurisdiction over enforcement of any material respect to the holders of Company Common Stock Antitrust Laws (after giving effect to the Mergersany such Governmental Entity, a “Governmental Antitrust Entity”) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessapplicable Law.
Appears in 1 contract
Sources: Merger Agreement
Interim Operations. 1
Except as (ax) The required by applicable Law, (y) expressly contemplated or permitted by this Agreement or (z) set forth in Section 6.1 of the Company Disclosure Letter, the Company covenants and agrees that, during the period from and after the date of this Agreement through and prior to the earlier of the Closing or the termination of this AgreementEffective Time, except with the written consent of Parent (1) to the extent Parent shall otherwise give its prior which consent in writing (such consent is not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Scheduleshall, (3) as may be required by applicable Legal Requirementsand shall cause each of its Subsidiaries to conduct their business in the ordinary course of business and in a manner consistent with past practice in all material respects and, or (4) as expressly required by to the extent consistent with and not in violation of any other provision of this AgreementSection 6.1, the Company shall, and shall cause the Company its Subsidiaries to, use their respective commercially reasonable efforts to conduct its to, in all material respects, (1) preserve their business organizations intact and (2) maintain existing material relations and goodwill with Governmental Entities, suppliers, customers, Company Independent Affiliates, owner operators, business associates and key employees.
(a) Without limiting the generality of the foregoing and in furtherance thereof, from and after the ordinary course execution and delivery of business; provided that any action this Agreement until the Effective Time, except as (x) required by applicable Law, (y) expressly contemplated or permitted by the remaining provisions of this Agreement, or (z) as set forth in Section 4.1(a) (including Section 4.1(a) 6.1 of the Company Disclosure Schedule) will not constitute a violation Letter (it being understood and hereby agreed that if any action is expressly permitted by any of the foregoing. During following subsections such action shall be expressly permitted under the period from the date first sentence of this Agreement through the earlier of the Closing or the termination of this AgreementSection 6.1), except with the written consent of Parent (A) to the extent Parent shall otherwise give its prior which consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent is not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall will not (and shall cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend adopt any change in the Company’s Organizational Documents articles of incorporation or amend bylaws, or adopt any change in the Organizational Documents applicable governing instruments of any Company Subsidiaryof its Subsidiaries;
(ii) splitmerge or consolidate with any other Person or restructure, combinereorganize or completely or partially liquidate, subdivide, change, exchange, amend the terms of or reclassify except for any shares such transaction between wholly owned Subsidiaries of the Company’s capital stock , or other equity interests between any wholly owned Subsidiary of the Company or any Company Subsidiaryand the Company;
(iii) acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or any assets, rights or properties from any other Person, in each case other than (x) purchases of goods, equipment, products, off–the–shelf software and other assets in the ordinary course of business or pursuant to existing Contracts, or (y) acquisitions not exceeding $5,000,000 in the aggregate;
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, or encumbrance of, any shares of its or its Subsidiaries’ capital stock or equity interests (other than (A) the issuance of Company Common Stock upon the exercise of Company Options and settlement of Company RSAs and Company PSAs in accordance with the Stock Plan, in each case that are outstanding as of the date hereof and (B) the issuance of shares by a wholly owned Subsidiary of the Company to the Company or to another wholly owned Subsidiary of the Company), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, stock units, stock awards, warrants or other rights of any kind to acquire any shares of such capital stock, equity interests, convertible or exchangeable securities, other than in connection with the incurrence or granting of Liens and pledging of collateral required under, and pursuant to the terms of, the Credit Agreement or the Company Notes and their respective collateral documents (provided that prompt notice to the Buyer Parties will be provided by the Company in connection therewith);
(v) declare, authorize, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its or its Subsidiaries’ capital stock or the capital stock equity interests (except for dividends or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company SubsidiarySubsidiary of the Company);
(ivvi) adjust, reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by mergeror amend the terms of, consolidationdirectly or indirectly, operation any of law, acquisition of stock, other its capital stock or equity interests or assetssecurities convertible or exchangeable into or exercisable for any shares of its capital stock or equity interests (other than the acquisition of any Company Common Stock in connection with the exercise of Company Options or in order to pay Taxes in connection with the exercise of Company Options or the vesting of Company RSAs and Company PSAs, formation in each case, pursuant to the Stock Plan);
(vii) incur any Indebtedness for borrowed money or guarantee or otherwise become liable for, any indebtedness of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other another Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsa wholly owned Subsidiary of the Company), or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries, in each case other than (A) in the ordinary course of business with a face value or principal amount not in excess of $5,000,000 in the aggregate, or (B) in the ordinary course under letters of credit, lines of credit or other credit facilities or arrangements in effect on the date hereof, including amounts available under the Credit Agreement;
(viii) except in the ordinary course of business, (A) make or change any material Tax election; (B) file any material amended Tax Return; or (C) enter into any business settlement, compromise or division closing agreement within the meaning of another PersonCode §7121 with respect to a material amount of Taxes;
(ix) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire, or (D) otherwise dispose of any material assets exceptassets, (1) acquisitions by properties or rights of the Company from or any wholly owned Company Subsidiary of its Subsidiaries, including capital stock of any of its Subsidiaries, except (x) sales or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory dispositions in the ordinary course of business or pursuant to existing Contracts, (3y) inbound licenses sales or other grants dispositions by the Company or assignments any of Intellectual Property its wholly owned Subsidiaries to the Company or any of its wholly owned Subsidiaries, or (z) sales or dispositions not exceeding $3,000,000 in the ordinary course of businessaggregate;
1 Note to W&S: Subject to ongoing review by (x) incur or ▇▇▇▇▇ ▇ ▇▇▇▇ (other than a Permitted Lien) on any material assets, properties or rights of the Company.
Company or any of its Subsidiaries other than (vx) except Liens granted in connection with any transaction between Indebtedness permitted under this Section 6.1 or (y) Liens required under the Credit Agreement or the Company and any wholly owned Notes;
(xi) except, in each case, as required by a Benefit Plan in effect as of the date hereof or permitted under Section 6.1(a)(xi) of the Company Subsidiary or among any wholly owned Company SubsidiariesDisclosure Letter, issue, sell, (A) grant or otherwise permit provide any severance or termination payments or benefits to become outstanding any additional shares ofService Providers, (B) increase the benefits or securities convertible or exchangeable for, or options, warrants or rights compensation to acquire, any shares of its capital stock or other equity interestsService Provider, other than shares merit or market-based increases in base salary, regular wages or annual bonus opportunities for employees with an annual base salary of Company Common Stock issuable upon exercise of outstanding Company Options;
less than $160,000 (vithe “Covered Employees”) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; provided that such increases shall not increase compensation by more than three and a half percent (B3.5%) pursuant to written Contracts or commitments existing as of in the date of this Agreement; or aggregate, (C) as security for grant any borrowings permitted by Section 4.1(a)(viii); new awards or benefits to any Service Provider, (D) licenses granted to customers hire or other third parties engage the services of any Service Provider, except for the hiring or engagement of any Covered Employees in the ordinary course of business in a manner consistent with past practice;
, (viiE) directly or indirectly repurchaseestablish, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Benefit Plan or any plan, program, arrangement, policy or agreement that would be a Benefit Plan if it were in existence on the date hereof, except amendments that do not materially increase the Company Plan except to and its Subsidiaries cost of providing the extent permitted benefits or as required by clauses applicable Law and any actions taken solely by the “plan sponsor” (B)within the meaning of Section 3(16)(B)(iii) of ERISA) of any Multiemployer Plan, (C), (D) or (EF) of this Section 4.1(a)(ix), (B) increase, or discretionarily accelerate the vesting or payment of, the compensation or benefits of any member of equity or equity-based award held by any Service Provider;
(xii) except (i) as permitted by this Section 6.1 and (ii) with respect to the Company BoardContracts set forth in Section 5.1(q)(J), current employee(A) modify or amend, or former employee of the Company terminate or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment a waiver of any employee of the Company or right under, any Company Subsidiary whose annual base salary exceeds $100,000 Material Contract (other than for cause); except, in each case, for: (1x) extensions at the end of term that do not materially modify or amend the terms of such Contract and (y) joinders and other amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after Credit Agreement and the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President Indenture in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits as otherwise required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)thereunder, except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (By) other than in a manner that would result in an increase in breakage fees or impose prepayment fees in connection with the termination or cancellation thereof), transactions between (B) enter into any successor agreement to an expiring Material Contract that modifies or among direct amends in a manner materially adverse to the Company the terms of such expiring Material Contract or indirect wholly owned (C) enter into any new Contract that would have been considered a Material Contract if it were entered into at or prior to the date hereof other than (x) any such Contracts that may be cancelled, terminated or withdrawn without material liability to the Company Subsidiariesor its Subsidiaries upon notice of 90 days or less and (y) to the extent such Contract is required to effect any action explicitly permitted by Section 6.1(a); provided, however, that, with respect to the Contracts set forth in Section 5.1(q)(J), no modification or amendment shall obligate the Company or its Subsidiaries to conduct business on an exclusive basis with any third party, a grant “most favored nation” terms to any third party;
(xviixiii) make any capital contributions or investments in any other Person (other than a wholly-owned Subsidiary);
(xiv) settle or compromise any litigation, claim, suit, action claim or proceeding, except for investigation other than settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on where the amount paid or payable by the Company in a settlement or any Company Subsidiary (other than confidentiality obligations)a compromise, in each case, does not exceed $2,000,000 and (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do that does not include an admission of liability or fault create material obligations that would impose any material restrictions on the part business of the Company or any of its Subsidiaries;
(xv) except as provided for in the Company’s budget for the Company Subsidiaryand its Subsidiaries for fiscal year 2015, incur or commit to incur any capital expenditures;
(xvi) implement, adopt or make any change to its methods, policies or practices of accounting, except as required by GAAP or applicable Law;
(xvii) purchase outstanding Company Notes in an amount that exceeds $30,000,000 in the aggregate;
(xviii) materially reduce the amount of insurance coverage adopt, modify, amend or fail to renew or maintain terminate any material existing insurance policies;Collective Bargaining Agreement; or
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability agree, authorize or commit to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in do any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of Nothing contained in this Agreement through is intended to give any Buyer Party, directly or indirectly, the earlier of right to control or direct the Closing Company’s or its Subsidiaries’ operations prior to the termination Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, except (1) to the extent the Company shall otherwise give complete control and supervision over its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessoperations.
Appears in 1 contract
Interim Operations. 1
(a) The Except (i) as described in Section 5.1(a) of the Company Disclosure Letter, (ii) as otherwise expressly required or permitted by this Agreement or any other Transaction Document, (iii) as required by applicable Law or COVID-19 Measures or (iv) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed, or denied), the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through until the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementClosing, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct operate the business of it and its business Subsidiaries in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of consistent with past practice and to preserve their business organizations intact and maintain existing relations with the Company Disclosure ScheduleTop Suppliers, Company Top Customers and the Company’s executive officers.
(b) will not constitute a violation of Without limiting the generality of, and in furtherance of, the foregoing. During the period , from the date of this Agreement through until the earlier Closing, except (w) as described in the corresponding subsection of Section 5.1(b) of the Closing Company Disclosure Letter, (x) as otherwise expressly required or permitted by this Agreement or any Transaction Document, (y) as required by applicable Law or COVID-19 Measures or (z) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed or denied), the termination Company will not and will not permit its Subsidiaries to:
(i) adopt or propose any change in its or its Subsidiaries’ Organizational Documents;
(ii) (A) merge or consolidate itself or any of its Subsidiaries with any other Person, except for transactions among its wholly owned Subsidiaries or (B) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries;
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $100,000, or acquire any business or entity (whether by merger or consolidation, by purchase of substantially all assets or equity interests or by any other manner), in each case, in any transaction or series of related transactions, other than acquisitions or other transactions pursuant to Contracts to which the Company or any of its Subsidiaries are a party that are in effect as of the date of this Agreement;
(iv) sell, lease, license or otherwise dispose of any of its material assets or properties (other than Intellectual Property), except (A) to the extent Parent shall otherwise give its prior consent in writing (for sales, leases, licenses or other dispositions in the case ordinary course of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), business and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) for sales, leases, licenses or other dispositions of assets and properties with a fair market value not in excess of $100,000 in the aggregate or (C) pursuant to Contracts to which the Company or any of its Subsidiaries are a party that are in effect as set forth in Section 4.1(aof the date of this Agreement;
(v) except pursuant to awards granted under the Company’s Stock Plan, issue, sell, grant or authorize the issuance, sale or grant of any shares of capital stock or other securities of the Company Disclosure Schedule, or any of its Subsidiaries (C) as may be required other than issuances by applicable Legal Requirementsa wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company), or (D) as expressly required by this Agreementany options, warrants, convertible securities, subscription rights or other similar rights entitling its holder to receive or acquire any shares of such capital stock or other securities of the Company shall not (and shall not permit or any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryits Subsidiaries;
(iivi) reclassify, split, combine, subdivide, changeredeem or repurchase, exchange, amend the terms any of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or options, warrants or securities convertible or exchangeable into or exercisable for any Company Subsidiaryshares of its capital stock, except in connection with the net exercise or settlement of awards under the Company’s Stock Plan;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of enter into any Company Subsidiary, other than dividends or distributions only agreement with respect to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting of its capital stock;
(ivviii) acquire (by mergermake any loans, consolidationadvances, operation of law, acquisition of stock, other equity interests guarantees or assets, formation of a joint venture capital contributions to or otherwise) (A) any other Person, (B) any equity interest investments in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or any direct or indirect wholly-owned Subsidiary of the Company), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property than in the ordinary course of business;
1 Note (ix) incur any Indebtedness for borrowed money or guarantee any such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to W&S: Subject to ongoing review by the Company.
(v) except in connection with acquire any transaction between debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets Indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice; (B) pursuant , not to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties exceed $100,000 in the ordinary course of business in a manner consistent with past practiceaggregate;
(viix) directly make or indirectly repurchasecommit to make capital expenditures other than in an amount not in excess of $250,000, redeem or otherwise acquire in the aggregate;
(xi) enter into any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) Contract that would have been a Material Contract had it been entered into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares , other than in the ordinary course of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable awardbusiness;
(viiixii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defeaseamend or modify in any material respect or terminate any Material Contract, or cancel waive or release any indebtedness for borrowed moneymaterial rights, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation claims or benefits of under any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptMaterial Contract, in each case, for: other than in the ordinary course of business;
(1xiii) amendments make any material changes with respect to Company Plans determined its accounting policies or procedures, except as required by the Company changes in good faith to be required to comply with applicable Legal Requirements; Law or GAAP;
(2xiv) hiring settle any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this AgreementProceeding, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President except in the ordinary course of business or where such settlement is covered by insurance or involves only the payment of monetary damages in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are an amount not more than $375,000 in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleaggregate;
(xxv) except in the ordinary course of businessbusiness consistent with past practice, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign file any material rights under any Material Contractsamended Tax Return, make, revoke or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax electionelection in a manner inconsistent with past practice, adopt or change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle accounting method or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxesperiod, enter into any agreement with a Governmental Entity with respect to material Taxes, settle or compromise any examination, audit or other action with a Governmental Entity of or relating to any material Taxes if or settle or compromise any claim or assessment by a Governmental Entity in respect of material Taxes, or enter into any Tax sharing or similar agreement (excluding any commercial contract not primarily related to Taxes), in each case, to the extent such agreement would action could reasonably be expected to result have any adverse and material impact on Parent;
(xvi) except in the ordinary course of business or pursuant to the terms of any Company Benefit Plan in effect as of the date of this Agreement or as required by Law, (A) increase the annual salary or consulting fees or target annual cash bonus opportunity, of any Company Employee with an annual salary or consulting fees and target annual cash bonus opportunity in excess of $250,000 as of the date of this Agreement, (B) become a party to, establish, adopt, amend, or terminate any material Company Benefit Plan or any arrangement that would have been a material Tax liabilityCompany Benefit Plan had it been entered into prior to this Agreement, request (C) take any Tax ruling from action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any Governmental Entityother way secure the payment, surrender of compensation or benefits under any right to claim a material refund of TaxesCompany Benefit Plan, or, (D) forgive any loans or issue any loans (other than routine travel advances issued in the ordinary course of business) to any Company Employee, agree to an extension (E) hire any employee or waiver engage any independent contractor (who is a natural person) with annual salary or consulting fees and target annual cash bonus opportunity in excess of $250,000 or (F) terminate the statute employment of limitations with respect to a material amount of Taxesany executive officer other than for cause;
(xiiixvii) sell, assign, lease, exclusively license, pledge, encumber, divest, abandon, allow to lapse or expire any material Company Intellectual Property, other than consignment grants of non-exclusive licenses in the ordinary course of business to customers for use of the products or services of the Company Products or otherwise in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage become a party to, establish, adopt, amend, commence participation in or fail to renew enter into any collective bargaining or maintain any material existing insurance policiesother labor union Contract;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business keep current and in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirementsfull force and effect, or (D) as expressly permitted to comply with the requirements of, or required by this Agreementto apply for or renew, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s permit, approval, authorization, consent, license, registration or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid certificate issued by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities Governmental Entity that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets is material to the conduct of the business of the Company and the Company its Subsidiaries, taken as a whole, except in each case, ;
(1xx) acquisitions by Parent from file any wholly owned Parent Subsidiary prospectus supplement or among registration statement or consummate any wholly owned Parent Subsidiaries; (2) offering of securities that requires registration under the purchase of equipment, supplies and inventory Securities Act or that includes any actual or contingent commitment to register such securities under the Securities Act in the ordinary course future;
(xxi) fail to maintain, cancel or materially change coverage under, in a manner materially detrimental to the Company or any of businessits Subsidiaries, any insurance policy maintained with respect to the Company and its Subsidiaries and their assets and properties;
(xxii) enter into any material new line of business outside of the business currently conducted by the Company and its Subsidiaries as of the date of this Agreement; or
(3xxiii) inbound licenses agree or other grants or assignments authorize to do any of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementEffective Period, except (1i) as otherwise expressly required or contemplated by this Agreement or the Restructuring Term Sheet, (ii) as required by applicable Law (including the Bankruptcy Code) or (iii) as consented to the extent Parent shall otherwise give its prior consent in writing by the Requisite Supporting Lenders (such which consent shall not to be unreasonably withheld, conditioned or delayed), (2x) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may Business shall be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business conducted in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(abusiness consistent with past practice and in accordance with applicable Law and (y) (including Section 4.1(a) of the Company Disclosure Scheduleand its Subsidiaries shall use their respective commercially reasonable efforts to preserve intact the Business and their relationship with customers, suppliers, distributors, wholesalers, retailers, employees and Governmental Entities.
(b) will not constitute a violation of Without limiting the generality of, and in furtherance of, the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementEffective Period, except (Ax) as otherwise expressly required or contemplated by this Agreement or the Restructuring Term Sheet, (y) as required by applicable Law (including the Bankruptcy Code) or (z) as consented to the extent Parent shall otherwise give its prior consent in writing by the Requisite Supporting Lenders (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such which consent shall not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to):, directly or indirectly:
(i) amend the Company’s Organizational Documents certificate of incorporation, bylaws or amend other organizational documents of the Organizational Documents of any Company Subsidiaryor its Subsidiaries;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate the Company or any of its Subsidiaries or otherwise enter into any agreements providing for the sale of their respective material assets, changeoperations or business;
(iii) acquire assets outside of the ordinary course of business from any other Person;
(iv) issue, exchangesell, amend pledge, dispose of, grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests Equity Interests of the Company or any of its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock or Equity Interests, or any options, warrants or other rights of any kind to acquire any of the foregoing;
(iiiv) incur, create or assume any Encumbrance (other than Permitted Encumbrances) on any properties or assets, tangible or intangible, of the Company or any of its Subsidiaries;
(vi) (A) incur, assume or guarantee any Indebtedness or capitalized lease obligations or issue any debt securities or (B) make any loans, advances, guarantees or capital contributions to, or investments in, any other Person;
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than Equity Interests (except for dividends or distributions only to the extent paid by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock or Equity Interests (other than this Agreement);
(ivviii) acquire (by mergerreclassify, consolidationsplit, operation of lawcombine, acquisition of stocksubdivide or redeem, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its capital stock or Equity Interests or securities convertible or exchangeable for, into or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on exercisable for any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)foregoing;
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President Budget (as defined in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation Cash Collateral Orders), make or benefits required pursuant to authorize any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedulecapital expenditure;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of that would have been a Material Contract had it been entered into prior to this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension cancel or waiver terminate (other than, for the avoidance of the statute of limitations doubt, any expiration in accordance with its terms), or modify or amend in any material respect, or waive any material rights under, any Material Contract;
(xii) make any material changes with respect to a material amount of Taxesaccounting policies or procedures, except as required by changes in applicable Law or GAAP;
(xiii) settle or compromise any (A) Cause of Action (other than consignment settlements involving only unsecured claims with an allowed amount of less than one hundred thousand dollars ($100,000)), or (B) patent-related Cause of Action involving any of the Company Products Intellectual Property;
(xiv) transfer, assign, sell, lease, grant (other than in the ordinary course of business) any license with respect to, or, to the extent within the control of the Company or any of its Subsidiaries, abandon or permit to lapse, any material Intellectual Property;
(xv) terminate or fail to renew any material Business Permit;
(xvi) other than in the ordinary course of business, make any capital expenditure that is not contemplated by sell, pledge, dispose of, transfer or authorize the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)sale, except that the Company pledge, disposition or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting transfer of any capital stock assets or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation properties of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company its Subsidiaries;
(xvii) settle grant any material licenses, sublicenses, covenants not to assert or compromise similar rights with respect to any litigationassets or properties, claimwhether tangible or intangible, suitof the Company or its Subsidiaries;
(xviii) fail to use commercially reasonable efforts to maintain the Insurance Policies or to renew or replace the Insurance Policies following their termination;
(xix) except as required pursuant to the terms of any Debtor Plan in effect as of the date of this Agreement or the Approved ▇▇▇▇, action or proceeding, except for settlements or compromises other than (A) increase in any manner the compensation, consulting fees, incentive, bonus, retirement, welfare, fringe or other benefits, severance or termination pay of any employee or independent contractor, (B) become a party to, establish, adopt, amend, commence participation in or terminate any Debtor Plan or any arrangement that would have been a Debtor Plan had it been entered into prior to this Agreement, (C) grant any new awards, or amend or modify the terms of any outstanding awards, under any Debtor Plan, (D) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, discharge of compensation or satisfactionbenefits under any Debtor Plan, (E) change any actuarial or other assumptions used to calculate funding obligations with respect to any Debtor Plan that is required by applicable Law to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (F) forgive any loans or issue any loans (other than routine travel advances issued in the ordinary course of business in business) to any employee, (G) hire any employee or engage any independent contractor (who is a manner consistent with past practice, natural person) other than the engagement of liabilities reflected independent contractors to fill vacancies or reserved against in staff currently existing or contemplated projects to the Most Recent Company Balance Sheet, extent not currently staffed or (BH) those that do not (x) impose terminate the employment of any injunctive relief on the Company or any Company Subsidiary (officer other than confidentiality obligations), (yfor cause other than any officer who was provided with written notice of termination prior to the date of this Agreement and who is listed on Section 7.1(b)(xix) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company PermitsDisclosure Letter;
(xx) become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization;
(xxi) (A) fail to pay change in any issuance, renewal, maintenance and other payments that become due material respect any material method of accounting of the Company or its Subsidiaries for Tax purposes; (B) enter into any agreement with any Taxing Authority (including a “closing agreement” under Code Section 7121) with respect to any material Tax or Tax Returns of the Company Registered IP or otherwise abandon, cancel, its Subsidiaries; (C) surrender a right of the Company or permit its Subsidiaries to lapse a material Tax refund; (D) change an accounting period of the Company or its Subsidiaries with respect to any material Company Registered IP, other than in its reasonable business judgment Tax; (E) file an amended Tax Return; (F) change or in the ordinary course of business in a manner consistent revoke any material election with respect to Taxes; (G) make any material election with respect to Taxes that is inconsistent with past practice, or ; (BH) authorize the disclosure file any Tax Return that is inconsistent with past practice; (I) consent to any third party extension or waiver of the limitations period applicable to any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, Tax claim or assessment (other than in the ordinary course of business business); or (J) take any action (or fail to take any action) that would result in a manner consistent loss of any material Tax losses, credits or other attributes that may be used to reduce Tax liabilities (provided that, for the avoidance of doubt, the Company shall not be deemed to have violated the covenant in this clause (J) as the result of any action taken at the direction of the Supporting Lenders in connection with past practicethe Interfund Transfers);
(xxixxii) take revalue any assets or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) properties of the Code Company or its Subsidiaries (B) result in any of the conditions including Inventory), except to the Mergers set forth in ARTICLE V not being satisfiedextent required by GAAP; or
(xxiixxiii) authorizeagree, approve authorize or enter into any agreement commit, in writing or make any commitment otherwise, to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing actions.
(bc) Parent agrees that, during The Supporting Lenders shall not knowingly take or permit any of their Subsidiaries to take any action that is reasonably likely to prevent or materially impede the period from the date of this Agreement through the earlier consummation of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessTransactions.
Appears in 1 contract
Sources: Restructuring Support Agreement (Melinta Therapeutics, Inc. /New/)
Interim Operations. 1
(a) The Company covenants and agrees that, during the period from except (i) as expressly contemplated by this Agreement, or (ii) as agreed in writing by Parent, after the date of this Agreement through hereof, and prior to the earlier of the Closing or (x) the termination of this Agreement, except Agreement in accordance with Article XI and (1y) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementStock Purchase Closing Date, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions (including for purposes of this Section 4.1(a6.1 the Clubs) to:
(including Section 4.1(aa) conduct the business, operations, activities and practices of the Company Disclosure Schedule) will not constitute a violation of and its Subsidiaries and the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementClub, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv)respectively, (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; ;
(b) use its reasonable best efforts to preserve its present business organization intact and maintain satisfactory relations with customers, employees, contractors, regulators and others having business dealings with it;
(c) not amend its articles or certificates of incorporation or bylaws or comparable governing instruments;
(d) not, (i) except for (A) borrowing under Material Contracts (including, without limitation receivables purchase agreements) listed on Schedule 3.10(i), as in effect on the date hereof, and (B) pursuant additional borrowings from a recognized financial institution not involving the financing of VOI Receivables in a maximum amount of fifteen million dollars ($15,000,000.00) on terms that do not impose in relation to written Contracts the sum being borrowed any material prepayment penalties, incur, or commitments existing as assume or become subject to, whether directly, indirectly or by way of guarantee or otherwise, any indebtedness (long-term, short-term or otherwise) for borrowed money, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the date obligations of this Agreementany other Person; or (Ciii) as security make any loans, advances or capital contributions to, or investments in, any other Person (x) other than any wholly-owned Subsidiary of the Company, (y) other than loans in the form of VOI Receivables and (z) ordinary advances (A) to employees for travel and related business expenses and (B) to commission-based sales representatives not exceeding $40,000 for any borrowings permitted by Section 4.1(a)(viiiindividual and $500,000 in the aggregate, in the case of each of clauses (x) through (z); or (D) licenses granted to customers or other third parties , in the ordinary course of business in a manner consistent with past practice;
(viie) directly not (x) issue, sell, grant pursuant to any Plan (including the Option Plan), pledge, encumber, subject to any Lien or indirectly repurchasedispose of, redeem (y) split, combine or reclassify or (z) redeem, purchase or otherwise acquire acquire, in each case, any shares of any class or series of its capital stock or other equity interest in the Company’s Company or any Company Subsidiary’s of its Subsidiaries or any options, warrants or other rights to purchase any such capital stock or equity interests, interest or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s such capital stock or equity interestsinterests or otherwise make or effect any change in the issued and outstanding capitalization of the Company or any of its Subsidiaries, except: (A) except for shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of issued prior to the Company pursuant to Effective Time (A) upon the exercise of repurchase rights existing prior to the Options outstanding on the date of this Agreement; hereof under the Option Plan or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to rights granted under the Company ESPP;
(f) not declare, set aside or pay any Company Plan dividend or make any distribution of any assets of any kind whatsoever (i) to any of its shareholders including, without limitation, distributions in effect on redemption of or as the date hereof; purchase price for any capital stock or equity interest, or (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunitiesii) in amounts discharge or cancellation, in whole or in part, of any indebtedness, whether in payment of principal, interest or otherwise; provided, however, that are the Company may redeem -------- ------- shares of Company Common Stock from Majority Shareholder in exchange for TII (as defined in Section 7.15 below) pursuant to its agreement set forth in Section 7.15 and the Redemption Agreement;
(g) except as set forth in Schedule 6.1(g), not (i) sell, lease, transfer, assign, license, mortgage, pledge, encumber, subject to any Liens (other than (but not including for the purposes of this exception, Vacation Credits) Permitted Liens) or otherwise dispose of any of its assets, except for (x) sales to consumers of VOIs in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(Ay) amend or terminate (except for terminations pursuant to the expiration dispositions of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, tangible personal property in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, practice and (z) do not include an admission the disposition of liability or fault on TII to Majority Shareholder in accordance with Section 7.15 and pursuant to the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect Redemption Agreement, or (Bii) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuancelicense, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, dispose of or permit to lapse any material Company Registered IPright under or respecting, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make settlement regarding the infringement of, any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the MergersIntellectual Property;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Agreement and Plan of Merger and Reorganization (Cendant Corp)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date of this Agreement and prior to the Effective Time (unless Parent shall otherwise approve in writing (such approval not to be unreasonably withheld, delayed or conditioned), and except as (1) set forth on Section 6.1(a) of the Company Disclosure Letter, (2) provided in the Settlement Agreement or (3) otherwise expressly permitted by this Agreement or as required by applicable Laws), the business of it and its Subsidiaries shall be conducted in all material respects in the ordinary course of business and, to the extent consistent with the foregoing, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations substantially intact and maintain existing or satisfactory relations with Governmental Entities and customers, suppliers, service providers, creditors and lessors having significant business dealings with them, and keep available the services of its and its Subsidiaries’ key employees; provided, however, that no action taken by the Company or its Subsidiaries with respect to matters specifically addressed by clauses (i) through (xxi) of this Section 6.1(a) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except (A) as otherwise expressly permitted by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2C) as required by applicable Law, (D) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal RequirementsLetter, or (4E) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business provided in the ordinary course of business; provided that any action expressly permitted by Settlement Agreement in the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from form executed on the date of this Agreement through (and any amendment thereto entered into with the earlier written consent of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (ivParent), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend adopt any change in its certificate of incorporation or by-laws or other applicable governing instruments, other than ministerial or administrative changes not adverse to the Company’s Organizational Documents or amend the Organizational Documents interests of any Company SubsidiaryParent;
(ii) split(1) merge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate the Company or any of its Subsidiaries, changeexcept for any such transactions among wholly-owned Subsidiaries of the Company, exchangeor (2) commence or file any petition seeking (x) liquidation, amend reorganization or other relief under any U.S. Federal, U.S. state or other bankruptcy, insolvency, receivership or similar Law or (y) the terms appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official;
(iii) make any acquisition (whether by merger, consolidation, acquisition of stock or assets or otherwise) of any interest in any Person or any business, line of business or division thereof (which for the avoidance of doubt shall not include acquisitions of assets that are covered by clause (iv) below);
(iv) make any acquisition of assets, properties, operations or projects, other than (A) acquisitions of supplies in the ordinary course consistent with past practice used by the Company and its Subsidiaries in their operations or (B) acquisitions pursuant to Contracts in effect as of the date of this Agreement (copies of which have been made available to Parent);
(1) issue, sell, pledge, grant, transfer or encumber or otherwise dispose of or reclassify redeem, repurchase or otherwise acquire any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries or profits interests, stock appreciation rights, phantom stock or securities convertible into or exchangeable for, or subscriptions, options, warrants, calls, agreements, arrangements, undertakings, commitments or other rights of any kind to acquire, any shares of capital stock of the Company Subsidiaryor any of its Subsidiaries (other than (A) the issuance of shares or interests by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company, or (B) the issuance of shares or interests in respect of Company RSUs outstanding as of the date of this Agreement in accordance with their terms and the Stock Plan as in effect on the date of this Agreement or as otherwise permitted under clause (xviii) or (xix) below), or (2) take any action that would result in any adjustment under Section 4.4;
(iiivi) make any loans, advances or capital contributions to or investments in any Person (other than among the Company and any direct or indirect wholly-owned Subsidiary of the Company or among the Company’s wholly-owned Subsidiaries);
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestssecurities (except for dividends paid by any direct or indirect Subsidiary to the Company (or any other direct or indirect Subsidiary of the Company) and the other equity holders of such Subsidiary, in each case, on a pro rata basis in accordance with such Subsidiary’s certificate of incorporation or by-laws or other than shares applicable governing instruments and in the ordinary course consistent with past practice) or enter into any agreement with respect to the voting of Company Common Stock issuable upon exercise of outstanding Company Optionsits capital stock or other equity securities;
(viviii) except in connection with any transaction between for transactions among the Company and any wholly its wholly-owned Company Subsidiary Subsidiaries or among the Company’s wholly-owned Subsidiaries, reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire any wholly of its capital stock (or other equity securities) or securities convertible or exchangeable into or exercisable for any shares of its capital stock (or other equity securities) (other than the withholding of shares to satisfy withholding Tax obligations in respect of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the Stock Plan as in effect on the date of this Agreement);
(ix) incur, assume or otherwise become liable for any indebtedness for borrowed money or guarantee such indebtedness of another Person (other than a wholly-owned Subsidiary of the Company), or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries;
(x) except for expenditures related to operational emergencies, equipment failures or outages, make or authorize any capital expenditures in excess of $200,000 in the aggregate during any calendar quarter;
(xi) make any material changes with respect to financial accounting policies or procedures, except as required by GAAP;
(xii) settle any litigation claim or other pending or threatened proceeding by or before a Governmental Entity if such settlement (A) with respect to the payment of monetary damages, involves the payment of monetary damages that exceed $1 million individually or $3 million in the aggregate during any calendar year, net of any amount covered by insurance or third-party indemnification, or (B) with respect to any non-monetary terms or conditions therein, imposes or requires actions that would or would be reasonably likely to have a material effect on the continuing operations of the Company or any of its Subsidiaries (or Parent or any of its Subsidiaries after the Closing);
(xiii) except as required by Law (A) make, change or revoke any material Tax election, (B) settle or compromise any audit or proceeding relating to a material amount of Taxes, (C) file any amended Tax Return reflecting a material amount of Taxes, (D) make any change in any material Tax accounting method or (E) enter into any closing agreement relating to a material amount of Taxes;
(xiv) transfer, sell, assignlease, transferlicense, lease mortgage, pledge, surrender, encumber, divest, cancel, abandon or license allow to any third party, lapse or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, expire or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP amount of assets, licenses, operations, rights, product lines or material tangible assets businesses of the CompanyCompany or its Subsidiaries, including capital stock (or other equity interests) of any such Subsidiaries, other than: than (A) sales of inventory, goods or services obsolete assets that are not material and are no longer used in the ordinary course operation of the business or (B) pursuant to Contracts in effect as of the date of this Agreement (copies of which have been made available to Parent);
(xv) become a manner consistent party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with past practice a labor union, works council or of obsolete equipment similar organization;
(xvi) (A) other than normal vendor renewals, extensions or assets replacements or otherwise in the ordinary course of business consistent with past practice; , modify or amend in any material respect or terminate or cancel or waive, release or assign any material rights or claims with respect to, any Material Contract or (B) pursuant enter into any Contract that, if entered into prior to written Contracts or commitments existing the date of this Agreement, would qualify as a Material Contract under any of clauses (B) through (M) of Section 5.1(j)(i);
(xvii) enter into any new line of business other than any line of business that is reasonably ancillary to and a reasonably foreseeable extension of any line of business as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viixviii) directly except as may be required by applicable Law or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of businessAgreement, (i)(AA) establish, adopt, terminate or materially amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or material Company Plan; (B) waive, release grant to any employee or assign service provider any material rights increase in base salary, wages, bonuses, incentive compensation or severance, retention or other employee benefits; (C) grant any equity-based awards (whether under the Stock Plan or otherwise); (D) accelerate the time of payment for, or vesting of, any compensation or benefits; or (E) materially change any actuarial or other assumption used to calculate funding obligations or liabilities under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policiesPlan;
(xix) (A) amend hire any employee or other service provider; provided, however, that the Company Permits in a manner and its Subsidiaries shall be permitted to hire employees or engage other service providers to fill existing positions that adversely impacts the Company’s ability to conduct its business in any material respect are or (B) terminate become vacant or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments positions that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or are newly created in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) practice to the extent that the annual compensation opportunity provided to any such employee or other service provider does not exceed $250,000 and, in the case of service providers other than employees, the duration of engagement does not exceed six months, and the compensation and benefits provided to any such employee or other service provider are consistent with terms previously provided by the Company shall otherwise give or its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory Affiliates in the ordinary course of business; or (3B) inbound licenses terminate any employee or other grants service provider whose annual compensation opportunity exceeds $250,000 other than for cause; or
(xx) agree, authorize or assignments commit to do any of Intellectual Property the foregoing.
(b) From the date of this Agreement until the Effective Time, except as Parent may approve in writing, the ordinary course Company will not (i) amend, modify or terminate the Settlement Agreement or seek, move for or support a motion seeking any amendment, modification or termination, other than an amendment or modification that is immaterial and not adverse to Parent, the Company, this Agreement and the transactions contemplated herein, (ii) amend, modify, supplement or terminate the Bankruptcy Court Orders or the forms thereof or otherwise seek, move for or support a motion seeking any such amendment, modification, supplement or termination, other than any amendment, modification or supplement to any of businessthe Bankruptcy Court Orders or the forms thereof that is immaterial and not adverse to Parent, the Company, this Agreement and the transactions contemplated herein or (iii) agree to preserve any Contract pursuant to the Settlement Agreement.
(c) Notwithstanding anything to the contrary contained in this Agreement, the Company may authorize, declare and distribute to holders of Class A Shares, Company Restricted Shares and Company RSUs a dividend of one contingent value right per Class A Share, Company Restricted Share and Company RSU representing such holder’s entitlement to receive its pro rata share of all amounts paid by SunEdison to the Company in respect of any unsecured claims that remain outstanding following the Closing, as contemplated by the Settlement Agreement, net of the out-of-pocket costs to the Company actually incurred pursuing such claims, recovering such amounts and issuing such contingent value rights.
(d) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
(e) To the extent the condition to Closing set forth in Section 7.2(c) (Litigation Settlement) would not be satisfied, the Company and Parent shall negotiate and consider in good faith an adjustment to, or a deferral of a portion of, the Per Share Merger Consideration so that the net effect of such adjustment will cause the satisfaction of such condition.
(f) The Company shall keep Parent reasonably informed as to the status of, and give Parent the opportunity to participate in, settlement negotiations relating to the matters set forth in Section 6.1(f) of the Company Disclosure Letter.
Appears in 1 contract
Interim Operations. 1
Except (ai) The Company agrees that, during the period from the date of this Agreement through the earlier as set forth in Section 5.1 of the Closing Company Disclosure Schedule, (ii) as required or the termination of expressly permitted by this Agreement, except including under the second sentence of this Section 5.1, (1iii) to as required by applicable Law or (iv) with the extent prior written consent of Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), from the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with Article VII (2the “Interim Period”), the Company will, and will cause each of its Subsidiaries to, conduct the business of the Company and its Subsidiaries in the Ordinary Course of Business. In addition, and without limiting the generality of the foregoing, except (i) as set forth in Section 4.1(a) 5.1 of the Company Disclosure Schedule, (3ii) as may be required by applicable Legal Requirements, or (4) as expressly required permitted by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted (iii) as required by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing applicable Law or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), ) with the prior written consent of Parent (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of during the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementInterim Period, the Company shall not (will not, and shall will not permit any Company Subsidiary of its Subsidiaries to):, do any of the following:
(a) (i) amend declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination thereof) in respect of any Shares or capital stock or other equity interests, other than (1) dividends and other distributions by a direct or indirect Subsidiary to its parent in the Ordinary Course of Business, (2) dividends or other distributions by an entity in which the Company directly or indirectly owns at least a majority interest, in the Ordinary Course of Business, and (3) if applicable and upon consultation with Parent, to the extent reasonably necessary to maintain the Company’s Organizational Documents or amend qualification as a REIT and to avoid the Organizational Documents imposition of any Company Subsidiary;
entity-level income and excise taxes; (ii) split, combine, subdivide, change, exchange, amend the terms of subdivide or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
its Subsidiaries; or (iii) declarerepurchase, set asideredeem or otherwise acquire, make directly or pay indirectly, any dividend Shares or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest interests of any the Company Subsidiaryor its Subsidiaries, other than dividends the withholding of Shares to satisfy withholding Tax obligations with respect to Shares granted pursuant to Company Equity Awards and forfeitures of Company Equity Awards;
(b) except as required by Section 5.19, issue, deliver, sell, grant, pledge or distributions only otherwise encumber or subject to the extent paid any Lien (other than Liens imposed by applicable securities Laws) any wholly owned Company Subsidiary to shares of capital stock of the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests its Subsidiaries or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable forinto, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into exercisable or exchangeable for any shares of the Company’s such capital stock, or any Company Subsidiary’s rights, warrants or options to acquire any shares of such capital stock or equity interestssuch convertible or exchangeable securities, except: in each case;
(Ac) shares of Company Common Stock repurchased from employees except as required by Section 5.19, amend, supplement or consultants or former employees or consultants modify, the Organizational Documents of the Company pursuant or any of its Subsidiaries;
(d) make or adopt a material change in its accounting methods, principles or practices, except insofar as may be required by GAAP, applicable Law or statutory or regulatory accounting rules or interpretations with respect thereto or by any Governmental Authority (including the Financial Accounting Standards Board or any similar organization);
(e) except in relation to the exercise Liens to secure Indebtedness for borrowed money permitted to be incurred under Section 5.1(f), sell, lease (as lessor), license, mortgage, sell and leaseback or otherwise subject to any Lien (other than Permitted Liens), or otherwise dispose of repurchase rights existing prior to the date of this Agreement; any properties or assets (Bincluding Company Owned Property) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicableany interests therein, in accordance each case, with an aggregate value or purchase price in excess of $100,000 individually or $250,000 in the aggregate, in any transaction or series of related transactions, except that the Company and its Subsidiaries may continue to lease Company Owned Properties in the Ordinary Course of Business;
(f) incur, create, assume, refinance, replace or prepay any Indebtedness for borrowed money or guarantee such Indebtedness of another Person, or issue, sell or amend the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities of the Company or its Subsidiaries, other than (directlyi) the incurrence of Indebtedness for borrowed money in the Ordinary Course of Business under, contingently and in accordance with, the Existing Loan Agreements, as in effect as of the date hereof, (ii) intercompany Indebtedness or otherwise) guarantees between or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and any of its wholly owned Company Subsidiaries that will be satisfied or among any wholly owned Company Subsidiaries discharged as of the Closing or (and guarantees by iii) in connection with the Company or financing of accounts payable in the Company Subsidiaries in respect thereof)Ordinary Course of Business;
(ixg) (A) adopt, terminate or amend any Company Plan except to the extent other than as permitted by clauses (B), (C), (D) or (E) under another subsection of this Section 4.1(a)(ix)5.1, (Bi) increasematerially modify, amend or waive any material right or Action under or renew any Material Contract or (ii) enter into any new Contract that would constitute a Material Contract if existing on the date hereof;
(i) enter into any Contract with any current or prospective director, employee, consultant or independent contractor, (ii) accelerate the vesting or payment of, or increase the amount of, the compensation or benefits of with respect to any member of the Company Board, current or former employee, consultant or former employee independent contractor of the Company or its Subsidiaries, other than (A) the payment of annual bonuses for completed periods in the Ordinary Course of Business or (B) as required by any Company Subsidiary, (C) grant any rights to severance, retention, change Benefit Plan in control or termination pay to any member effect as of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring or as otherwise required by any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of businessapplicable Law, (i)(Aiii) adopt, materially amend or terminate any Company Benefit Plan (except for terminations pursuant to the expiration of the existing term of or any Material Contract) any Material plan, program, policy, arrangement, Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, understanding that would be a Company Benefit Plan if it were in effect existence on the date of this Agreement), would constitute a Material Contractexcept as required by applicable Law, (iv) grant any awards under any Company Benefit Plan, or (v) hire or engage, or terminate (other than for cause) the employment or engagement of any officer, employee, consultant or independent contractor;
(xii) change any of its methods of financial accounting or accounting practices in any material respect other than except as required by changes in GAAP;
applicable Law or, following consultation with Parent, to qualify or preserve the status of any of the Company’s Subsidiaries as a disregarded entity or partnership for United States federal income tax purposes or as a taxable REIT subsidiary within the meaning of Section 856(l) of the Code, as the case may be, (xiii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax electionelection with respect to Taxes, (ii) make a material change in any Tax accounting period method (or material method of Tax accountingfile a request to make any such change), amend (iii) file any material amended Tax Return if (and, in the case of filing any such amendment would reasonably be expected Tax Return as required by applicable Law prior to result the Closing, the Company shall provide drafts of each such Tax Return and supporting documents to Parent for its review and comment at least five (5) Business Days prior to the date on which the Company will file such Tax Return and shall consider in a material Tax liabilitygood faith any reasonable comments timely submitted by Parent), (iv) settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, (v) surrender any right to claim a material refund of TaxesTax refund, oroffset or credit, other than in the ordinary course of business, agree to an extension (vi) waive or waiver of extend the statute of limitations with respect to a any material amount Tax, other than pursuant to extensions of time to file Tax Returns obtained in the Ordinary Course of Business, or (vii) enter into any Tax protection agreement or any closing agreement with respect to Taxes;
(xiiij) other than consignment of Company Products settle or compromise (i) any Action, in the ordinary course of business, make each case made or pending against any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)Properties, except that the Company or any Company Subsidiary may make of the Subsidiaries, excluding any Non-Budgeted Capital Expenditure thatsuch matter relating to Taxes (which is covered by Section 5.1(i) above), when added to all other Non-Budgeted Capital Expenditures made or (ii) any Action involving any present, former or purported holder or group of holders of the Shares, in each case, in their capacity as such, where the amount paid by the Company or any of its Subsidiaries in settlement exceeds $100,000 individually or is not settled solely by the payment of money damages and does not provide a full release of the Company and its Subsidiaries;
(k) enter into any new line of business;
(l) adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization;
(m) remove any material personal property owned or leased by the Company or any of its Subsidiaries since from its Company Property except as may be required for necessary repair or replacement or as permitted by Section 5.1(f) above;
(n) initiate any Tax protest with respect to any Company Property;
(o) settle, agree to, or otherwise acquiesce to any condemnation or taking of all or any portion of a Company Owned Property;
(p) make any capital expenditures in an amount exceeding $20,000 at a single Company Property or $150,000 in the aggregate in any period of thirty (30) consecutive days between the date of this Agreement would notand the Effective Time, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement to obligate the Company or any of its Subsidiaries to make any commitment such capital expenditures; or
(q) agree to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing actions.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the earlier of the termination of this Agreement in accordance with Article VIII and the Effective Time (unless Parent shall otherwise approve in writing (such approval not to be unreasonably withheld, delayed or conditioned)), and except as otherwise expressly required or permitted by this Agreement or as required by applicable Law, the business of it and its Subsidiaries shall be conducted in all material respects in the ordinary course of business and, to the extent consistent with the foregoing and the restrictions in the next sentence, the Company and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations substantially intact, maintain satisfactory relationships with Governmental Entities, customers, suppliers, employees and other business relationships having significant business dealings with them and keep available the services of their key employees and agents; provided that any action specifically permitted by the exceptions to the restrictions set forth in clauses (i) - (xviii) of this Section 6.1(a) shall be deemed in compliance with this sentence. Without limiting the foregoing, from the date of this Agreement through until the earlier of the Closing or the termination of this AgreementAgreement in accordance with Article VIII and the Effective Time, except (1w) to the extent as otherwise expressly required or permitted by this Agreement, (x) as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2y) as is required by applicable Law or (z) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shall, will not and shall cause will not permit its Subsidiaries to:
(i) adopt any change in its certificate of incorporation or bylaws or other applicable governing documents;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person, use commercially reasonable efforts to conduct except for any such transactions among wholly owned Subsidiaries of the Company;
(iii) make any acquisition of any business or any assets in excess of $5,000,000 individually or $15,000,000 in the aggregate, other than acquisitions of assets acquired from the Company's or its business Subsidiaries' vendors or suppliers in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) business of the Company Disclosure Scheduleand its Subsidiaries;
(iv) will not constitute a violation issue, sell, pledge, dispose of, grant, transfer, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock or other equity securities of the foregoing. During the period from Company or any of its Subsidiaries or securities convertible or exchangeable into or exercisable for, or give any Person a right to subscribe for or acquire (including options, warrants or other rights of any kind), any shares of capital stock or other equity securities (other than (A) in respect of Company Options, RSUs and PSUs outstanding as of the date of this Agreement through as required by their terms as in effect on the earlier of the Closing or the termination date of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned Agreement or delayed), (B) as set forth in Section 4.1(a) the issuance of shares by a wholly owned Subsidiary of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, to the Company shall not (and shall not permit any Company or another wholly owned Subsidiary to):
(i) amend of the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary);
(iiv) splitmake any loans, combineadvances, subdivideguarantees or capital contributions to or investments in any Person in excess of $5,000,000 individually or $15,000,000 in the aggregate (in each case, changeother than to or in the Company, exchange, amend the terms of or reclassify any shares direct or indirect wholly owned Subsidiary of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary);
(iiivi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for (A) dividends or distributions only to the extent paid by any direct or indirect wholly owned Subsidiary of the Company Subsidiary to the Company or another to any other direct or indirect wholly owned Subsidiary of the Company Subsidiaryand (B) the payment of any dividend declared prior to the date hereof and related dividend equivalents on those RSUs that were being credited with dividend equivalents prior to the date hereof; provided that in no event shall such dividend exceed $0.5225 per Share), or enter into any agreement with respect to the voting of its capital stock;
(ivvii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, other than the retention or acquisition of stockany Shares tendered by current or former employees or directors in order to pay the exercise price of any Company Options or Taxes in connection with the exercise or vesting of Company Options, other equity interests RSUs or assets, formation PSUs);
(viii) incur any indebtedness for borrowed money or guarantee such indebtedness of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other another Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsa wholly owned Subsidiary of the Company), (C) or issue or sell any business debt securities or division warrants or other rights to acquire any debt security of another Person, or (D) any material assets except, (1) acquisitions by the Company from or any wholly owned Company Subsidiary or among any wholly owned Company of its Subsidiaries; , other than (2A) the purchase of equipment, supplies and inventory indebtedness incurred in the ordinary course of business under the Existing Credit Agreements in an aggregate principal amount that does not exceed, as of any time, the aggregate principal amount outstanding under the Existing Credit Agreements as of June 30, 2018 by more than $50,000,000 and that may be repaid at any time without premium or penalty and (B) indebtedness incurred under the Existing Credit Agreements in an aggregate amount up to $91,000,000 as required to fund a rabbi trust in connection with the transactions contemplated by this agreement under the Benefit Plan set forth in item 4(d) on Section 5.1(d)(ii) of the Company Disclosure Letter;
(ix) make any material changes with respect to financial accounting policies or procedures, except as required by GAAP;
(x) except as with respect to Transaction Litigation, which shall be governed by Section 6.14, and appraisal litigation which shall be governed by Section 4.2(f), settle, waive or release any litigation or other proceedings before a Governmental Entity if such settlement, waiver or release (A) with respect to the payment of monetary damages, involves the payment of monetary damages that exceed $5,000,000 individually or $15,000,000 in the aggregate, net of any amount covered by insurance or indemnification or (3B) inbound with respect to any non-monetary terms and conditions therein, imposes or requires actions that would have a material effect on the continuing operations of the Company or its Subsidiaries;
(xi) except as would not reasonably be expected to materially and adversely affect Parent or any of its Affiliates (including the Company and its Subsidiaries) after the Effective Time, (A) make, revoke or change any Tax election; (B) settle, consent to or compromise any Tax Proceeding or any Tax claim or assessment or surrender a right to a Tax refund, respectively, in excess of $5,000,000 individually or $15,000,000 in the aggregate; (C) consent to any extension or waiver of any limitation period with respect to any Tax claim or assessment; (D) file an amended Tax Return; (E) enter into a closing agreement with any Tax Authority regarding an amount of Taxes or Tax matter; (F) change any method of Tax accounting; or (G) take any action that would reasonably be expected to preclude the Company or any of its Subsidiaries from making a valid election under Section 965(h) or Section 965(n) of the Code;
(xii) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, other than (A) Permitted Liens, (B) transactions solely among the Company and/or its wholly owned Subsidiaries that would not result in a material increase in the Tax liability of the Company and its Subsidiaries, (C) non-exclusive licenses to customers and resellers in the ordinary course of business with respect to any Intellectual Property or (D) transactions involving the sales, leases, licenses or other grants dispositions of assets with a fair market value not in excess of $5,000,000 individually or assignments $15,000,000 in the aggregate or (E) abandonment of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(vxiii) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except as required pursuant to the terms in connection with any transaction between effect on the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets date of the Company, other thanAgreement of any Benefit Plan or as required by applicable Law: (A) sales of inventoryenter into or amend any agreement providing compensation or benefits to any Service Provider, goods except for amendments that do not materially increase compensation or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; benefits, (B) pursuant to written Contracts enter into, adopt, amend, modify or commitments existing as of the date of this Agreement; terminate any compensation or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur benefit plans (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, routine amendments or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue renewals to benefit plans that do not materially increase benefits or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries result in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (Bmaterially increased costs), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, cash or equity award held by any former or current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company SubsidiaryService Provider, (D) hire or promote engage the services of any employee at individual who is expected to hold a position of vice president or above and have an annual base salary equal to the level of Vice President or aboveabove $300,000, or (E) terminate increase the employment of compensation provided to any employee of the Company current or former Service Provider, except for any Company Subsidiary whose annual base salary exceeds $100,000 such increases that result from actions otherwise permitted under this clause (other than for causexiii), (F) pay any material bonus or incentive compensation; except, in each case, for: or (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotionG) to fill any currently existing Vice President fund the plans or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions arrangements set forth in on Section 4.1(a)(ix6.1(a)(xiii) of the Company Parent Disclosure ScheduleLetter;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (iixiv) enter into any Contract which would limit (i) the incurrence of indebtedness or agreement that, if in effect on (ii) the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver declaration and payment of the statute dividends in respect of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) stock of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebyits Subsidiaries;
(xv) enter into any agreementexcept as required by applicable Law or GAAP, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business revalue in any material respect any of its properties, assets, including writing off notes or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protectionaccounts receivables, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result make any material change in any of its accounting principles or practices;
(xvi) (A) incur or commit to incur any capital expenditures other than capital expenditures not to exceed $41,000,000 in the conditions aggregate during any six (6) month period from June 30, 2018 to the Mergers set forth in ARTICLE V not being satisfied; or
Closing Date (xxii) authorizeprovided, approve that such amount shall be committed or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business incurred in the ordinary course of business. Parent agrees that, during business on a pro-rated basis for the portion of any six (6) month period from elapsed between the date of this Agreement through the earlier of hereof and the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, Date); (B) as set forth enter into, modify, amend or terminate any Material Contract (which, for purposes of this Section 6.1(a)(xvi), shall be deemed not to include any Benefit Plans), other than Contracts entered into in the ordinary course of business with customers, suppliers or independent contractors or regarding real property (but not a Contract that would constitute a Material Contract under Section 4.1(b5.1(j)(i)(B) or any Contract that cannot be cancelled without material liability or penalty to the Company or its Subsidiaries upon notice of the Parent Disclosure Schedule, ninety (90) days or less); (C) as may be required by applicable Legal Requirements, maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice; (D) as expressly permitted engage in any transaction with, or required by this Agreemententer into any agreement, Parent shall not (and shall not permit arrangement or understanding with, any Parent Subsidiary to):
(i) amend Parent’s or either Affiliate of the Acquisition Subs’ Organizational Documents Company or amend other Person covered by Item 404 of Regulation S-K promulgated by the Organizational Documents of any Parent Subsidiary in any manner SEC that would be adverse required to be disclosed pursuant to Item 404; (E) effectuate a "plant closing," "mass layoff" (each as defined in the Worker Adjustment and Retraining Notification Act of 1988 or any similar Law) or other collective employee layoff, collective redundancy, or similar event; (F) grant any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) splitrefunds, combinecredits, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock rebates or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect allowances to any shares of Parent’s capital stock end user, customer, reseller or the capital stock or other equity interest of any Parent Subsidiarydistributor, in each case other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; or (3G) inbound licenses waive or release any material claim other grants or assignments of Intellectual Property than in the ordinary course of business;
(xvii) propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Significant Subsidiary; or
(xviii) agree, authorize or commit to do any of the foregoing.
(b) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the Company's or its Subsidiaries' operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent's or its Subsidiaries' operations. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries' respective operations.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement until the Closing, except as (w) approved in writing by Purchaser, (x) provided in subsections (b) through the earlier (e) of the Closing this Section 6.1 or the termination of as expressly required by this Agreement, except (1y) to required by applicable Law or (z) set forth in Section 6.1 of the extent Parent Company Disclosure Schedule, (A) the Company shall, and shall otherwise give cause each of its Subsidiaries to, conduct their business only in the Ordinary Course of Business (and shall timely pay all Entity Level Taxes) and (B) the Company shall not, and shall not permit any of its Subsidiaries to, take any of the following actions, in each case without the prior written consent in writing of Purchaser (such consent not to be unreasonably withheld, conditioned or delayed):
(i) amend any provision of its Organizational Documents;
(ii) [reserved];
(iii) merge, consolidate or effect any similar transaction with any Person other than a wholly owned member of the Company Group (each such Person that is not a wholly owned member of the Company Group being called a “Non-Group Member”), or enter into any joint venture or similar transaction with any Non-Group Member;
(2iv) acquire, in one or more transactions, from any Non-Group Member (A) except as set forth in Section 4.1(a6.1(b)(i) of the Company Disclosure Schedule, any assets, including computers, furnitures and other equipment (other than (1) equity interests or businesses with respect to which clause (B) below shall apply, (2) CMBS and/or CDO bonds and/or whole loans (or participations therein) with respect to which Section 6.1(b)(i) shall apply and (3) loans originated by the Company’s conduit business with respect to which Section 6.1(b)(ii) shall apply) for consideration in excess of $50,000 individually or $750,000 in the aggregate, or (B) any equity interests or business for aggregate consideration in excess of $10,000,000;
(v) sell, lease, license or otherwise dispose of, to any Non-Group Member, any of its assets, including any CDO-Related Security or any CMBS or any voting, approval or other rights under any CDO-Related Security or any CMBS, other than in the Ordinary Course of Business, or sell, lease, license or otherwise dispose of, to any Non-Group Member in the Ordinary Course of Business any of its assets, including any CDO-Related Security or any CMBS or any voting, approval or other rights under any CDO-Related Security or any CMBS, for consideration in excess of $10,000,000 individually or $25,000,000 in the aggregate except as otherwise permitted by Section 6.1(b)(i) or Section 6.1(b)(ii);
(vi) enter into any line of business or offer any services of a nature substantially different from those in which a member of the Company Group is engaged or which a member of the Company Group provides as of the date of this Agreement;
(vii) issue, sell, grant, transfer or otherwise dispose of, or pledge or otherwise encumber, any limited liability company interests, shares of capital stock of, or other equity interest in the Company or any of its Subsidiaries (collectively, “Company Group Equity Interests”), or any securities convertible into, or exercisable or exchangeable for, any Company Group Equity Interests or any options, calls, warrants or other rights to acquire any Company Group Equity Interests or any such convertible, exercisable or exchangeable securities in each case to any Non-Group Member;
(viii) split, combine or reclassify, or directly or indirectly repurchase, redeem or otherwise acquire, any Company Group Equity Interests not held by a member of the Company Group;
(ix) incur, assume or guarantee any Indebtedness to any Non-Group Member in excess of $10,000,000 in the aggregate, or cancel any Indebtedness owed by any Non-Group Member in excess of $10,000,000, in the aggregate, in each case other than in the Ordinary Course of Business with respect to indebtedness of the type referenced in clauses (c) through (f) of the definition of “Indebtedness”;
(x) loan or advance any amount to any Person;
(xi) cancel or waive all or any part of any Indebtedness owed to the Company or any of its Subsidiaries by any Seller or any of such Seller’s respective Affiliates (other than the Company and its Subsidiaries);
(xii) settle, compromise, discharge, waive, release or assign any material claim, right or Legal Proceeding, except where only monetary damages are owed by the Company or any of its Subsidiaries and there is no post-Closing obligation or cost to the Company or any of its Subsidiaries (other than covenants customary in settlement agreements that are of immaterial nature and scope);
(xiii) pay, assume, indemnify or incur any Indebtedness for the benefit of the Sellers or any of the Sellers’ Affiliates (other than the Company and its Subsidiaries), other than any payments required to be made pursuant to the terms of existing Indebtedness or Indebtedness incurred after the date of this Agreement pursuant to and in accordance with the terms of this Agreement;
(xiv) make any material changes with respect to its accounting policies, practices or procedures except as required by GAAP;
(xv) terminate, or waive any material right or benefit under, any Material Contract or (ii) other than in the Ordinary Course of Business, enter into, amend, renew or extend, or grant any consent under, any Material Contract;
(xvi) make or change any material election in respect of Taxes, adopt or change any material accounting method in respect of Taxes or otherwise, enter into any closing agreement, settle any claim or assessment in respect of a material amount of Taxes, request any ruling (other than the ruling requested on September 26, 2012) or similar guidance with respect to Taxes or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes, except as required by Law or GAAP;
(xvii) other than as may be required by the terms of any Benefit Plan in existence on the date of this Agreement or as set forth on Section 6.1(a)(xvii) of the Company Disclosure Schedule, (3A) as may be required by applicable Legal Requirementsterminate, enter into, or amend any Benefit Plan, or any plan, program, arrangement, practice or agreement that would be a Benefit Plan if it were in existence on the date hereof, except to the extent that such amendment would not materially increase benefits or result in materially increased administrative costs, (4B) increase the compensation of any Business Employees, officers or directors of the Company or any of its Subsidiaries, except for increases in base salaries in the Ordinary Course of Business or (C) grant any new award, amend the terms of outstanding awards or change the compensation opportunity under any Benefit Plan; provided, however, that the foregoing clauses (A)-(C) shall not restrict the Company or any of its Subsidiaries from entering into or making available to newly hired or promoted employees, in each case in the Ordinary Course of Business, plans, agreements, benefits and compensation arrangements that have a value that is consistent with the past practice of making compensation and benefits available to newly hired or promoted employees in similar positions;
(xviii) terminate the employment of (other than by the Company or its Subsidiaries for cause and in consultation with Purchaser) or hire any Person whose annual base compensation exceeded or is reasonably expected to exceed $250,000;
(xix) adopt, enter into, terminate, amend, extend or renew any collective bargaining agreement, works council agreement or other labor union or employee representative Contract;
(xx) agree to any restriction on the Company’s or any Subsidiary’s exercise of any of its rights under any CDO-Related Security, or agree to any modification, waiver or amendment of any agreement or instrument governing or relating to any CDO-Related Security, including any collateral management or similar Contract;
(xxi) agree to any restriction on the Company’s or any Subsidiary’s exercise of any of its rights under any CMBS, or agree to any modification, waiver or amendment of any Contract governing or relating to any CMBS, including any servicing or similar Contract;
(xxii) enter into any modification, waiver or consent of any Contract that would limit any right of the Company or any Subsidiary of the Company in any capacity to appoint (or approve or be consulted with respect to the appointment of) the primary servicer, master servicer or special servicer for any loan;
(xxiii) effect or cause the resignation of the Company or any Subsidiary of the Company from its capacity as expressly primary servicer, master servicer or special servicer in connection with any one or more loans or interests therein, or from its capacity as collateral manager, disposition consultant, administrator, investment manager or asset manager or in a similar capacity with respect to any one or more securities secured by or evidencing an interest in (in each case, whether directly or indirectly and whether in whole or in part) by one or more loans or interests therein;
(xxiv) terminate or allow coverage to lapse under any of the insurance policies set forth in Section 3.21 of the Company Disclosure Schedule without obtaining replacements therefor in the Ordinary Course of Business;
(xxv) enter into any Contract that would have been required by to be set forth on Section 3.7(a)(v) of the Company Disclosure Schedule if such Contract had been in effect on the date hereof;
(xxvi) subject to Section 6.1(b), (A) enter into any lease of real property in the capacity as lessee or sub-lessee (or in a similar capacity), except any renewals of existing leases in the Ordinary Course of Business or (B) purchase any direct or indirect interest in any real property (other than any such purchases required to be consummated pursuant to the terms of Contracts in existence on the date of this Agreement, all of which are described on Section 6.1(a)(xxvi) of the Company Disclosure Schedule); or
(xxvii) authorize, agree or commit to do any of the foregoing; provided, however, that the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable best efforts to conduct its business keep Purchaser reasonably informed of any action (other than in respect of actions not material in value and nature and taken in the ordinary course Ordinary Course of business; provided that any action expressly permitted Business) taken by the remaining provisions Company or any of its Subsidiaries that would require the prior written consent of Purchaser pursuant to this Section 4.1(a6.1 but for the fact that such action did not meet or exceed a threshold set forth in this Section 6.1.
(b) Notwithstanding anything to the contrary in Section 6.1(a):
(including Section 4.1(ai) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from From the date of this Agreement through the earlier Closing, the Company and its Subsidiaries shall have the right to acquire (x) CMBS and/or CDO bonds and/or whole loans (or participations therein) in respect of the Closing transactions set forth on Section 6.1 of the Company Disclosure Schedule and (y) in one or more transactions in the termination Ordinary Course of Business, from one or more Non-Group Members, up to $25,000,000 (based on consideration paid) in the aggregate of CMBS and/or CDO bonds and/or whole loans (or participations therein) so long as no individual purchase, or series of related purchases, exceeds $10,000,000 (based on consideration paid); provided that (1) the restrictions in Section 6.1(a)(v) shall not apply to the sale of CMBS and/or CDO bonds and/or whole loans (or participations therein) in the Ordinary Course of Business by the Company or any of its Subsidiaries to the extent the consideration received from such sales is used to fund the purchase of CMBS and/or CDO bonds and/or whole loans (or participations therein) pursuant to this clause (i) and (2) the consideration received from such sales of CMBS and/or CDO bonds and/or whole loans (or participations therein) shall be credited towards the $25,000,000 threshold (such that, for example, any such sales for $10,000,000 in total consideration provide an additional $10,000,000 in permitted acquisitions of such CMBS, CDO bonds and whole loans); provided, further, that if Purchaser consents in writing (which the parties agree may be granted by electronic mail from an authorized representative of Purchaser) to any acquisitions of CMBS and/or CDO bonds and/or whole loans (or participations therein) referenced in this clause (i), the aggregate consideration paid in respect of such acquisitions shall not be applied against the thresholds stated herein. From the date hereof to the Closing, the Company agrees to report to Purchaser on a weekly basis as to all actions taken in respect of this Agreementclause (i).
(ii) From the date of this Agreement through the Closing, the Company and its Subsidiaries shall have the right to originate loans in the Ordinary Course of Business in connection with the Company’s conduit business in amounts that do not, individually or in the aggregate, result in an equity investment by the Company or its Subsidiaries in such loans of more than $50,000,000, in the aggregate; provided that the Company and its Subsidiaries shall also have the right to incur, pursuant to the existing repurchase facilities of the Company and its Subsidiaries (to the extent permitted thereunder), for purposes of such origination indebtedness equal to 75% of the loan to value ratio (as determined in accordance with the existing repurchase facilities of the Company and its Subsidiaries); provided, further, that (1) the restrictions in Section 6.1(a)(v) shall not apply to the sale of loans originated in the Ordinary Course of Business in connection with the Company’s conduit business to the extent the consideration received from such sales is used to fund the origination of loans pursuant to this clause (ii) and (2) (x) if the Company or any of its Subsidiaries sells any such loans to a Non-Group Member the $50,000,000 threshold shall calculated without regard to such loan origination except that the amount of gain or loss realized by the Company and/or its Subsidiaries as a result of such sale shall be applied as a credit or deduct, as applicable, to such threshold and (y) if Purchaser consents in writing (which the parties agree may be granted by electronic mail from an authorized representative of Purchaser) to any loan origination referenced in this clause (ii), such originations shall not be applied against the threshold (provided that, notwithstanding this clause (y), in no event shall the Company and its Subsidiaries have loans outstanding that were originated in connection with the Company’s conduit business after the date of this Agreement that, individually or in the aggregate, result in an equity investment by the Company or its Subsidiaries in such loans of more than $75,000,000). Notwithstanding the foregoing, all references to $50,000,000 in this clause (ii) shall instead refer to $25,000,000 until the Company consummates the GSMC 2013-GC10 securitization transaction.
(iii) From the date of this Agreement through the Closing, except (A1) to the extent Parent shall otherwise give its prior consent for Permitted Activities, (2) as required by applicable Law or (3) as described in writing (in the case of subsections (ivSection 6.1(c), (vi), (viii), (ix), (x), (xii), (xiii)the Company shall not, and shall not permit any of its Subsidiaries or any of its Affiliates which it Controls to, in each case without the prior written consent of Purchaser (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of and which the Company Disclosure Schedule, (C) as parties agree may be required granted by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents electronic mail from an authorized representative of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxiPurchaser) take or cause to be taken any action, or knowingly exercise any power or authority, or fail to take any action required of it under applicable Law, or cause any existing Contract, permit, license, or authorization, or take or permit to be taken occur any actionSpecified Restricted Activity, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning in respect of Section 368(a) of the Code or (B) result in any of the conditions to commercial properties identified in Exhibit O-1 (collectively, the Mergers set forth “Commercial Properties” and each individually a “Commercial Property”). Without limiting anything contained in ARTICLE V not being satisfied; or
this clause (xxii) authorizeiii), approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent its Subsidiaries and Affiliates which it Controls to, use commercially reasonable efforts to conduct its business in consult with Purchaser with respect the ordinary course of business. Parent agrees thatCommercial Properties (including regarding (x) the management, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreementmaintenance, except (A) to the extent the Company shall otherwise give its prior consent in writingdevelopment, construction, operation, and remediation thereof, (By) as set forth in Section 4.1(bany substantive communications with any Governmental Authority and (z) of the Parent Disclosure Scheduleany offers or solicitations regarding any Commercial Property), on a weekly basis (C) as may be required by applicable Legal Requirementsand, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiarymaterial issues with respect to a Commercial Property, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Unit Purchase Agreement (Starwood Property Trust, Inc.)
Interim Operations. 1
(a) The Except (i) as described in Section 5.1(a) of the Company Disclosure Letter, (ii) as otherwise expressly required by this Agreement or any other Transaction Document, (iii) as required by applicable Law or COVID-19 Measures or (iv) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed, or denied), the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date Execution Date until the Closing, or the earlier termination of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give in accordance with its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreementterms, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct (A) operate its business in the ordinary course of business; provided that any action expressly permitted by business substantially consistent with past practice and (B) use commercially reasonable efforts to maintain and preserve intact its business organization, assets, properties and material business relations.
(b) Without limiting the remaining provisions generality of, and in furtherance of, the foregoing, from the Execution Date until the Closing or the earlier termination of this Agreement in accordance with its terms, except (v) as described in the corresponding subsection of Section 4.1(a) (including Section 4.1(a5.1(b) of the Company Disclosure ScheduleLetter, (w) as otherwise expressly required by this Agreement or any Transaction Document, (x) as required by applicable Law or COVID-19 Measures or (y) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed or denied), the Company will not constitute and will not permit its Subsidiaries to:
(i) adopt or propose any change in its or its Subsidiaries’ Organizational Documents;
(ii) (A) merge or consolidate itself or any of its Subsidiaries with any other Person, except for transactions among its wholly owned Subsidiaries or (B) adopt or enter into a violation plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the foregoing. During the period from the date of this Agreement through the earlier Company or its Subsidiaries;
(iii) Except as set forth on Section 5.1(b)(iii) of the Closing Company Disclosure Letter, acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the termination aggregate in excess of this Agreement$100,000, or acquire any business or entity (whether by merger or consolidation, by purchase of substantially all assets or equity interests or by any other manner), in each case, in any transaction or series of related transactions, other than acquisitions or other transactions;
(iv) sell, lease, license or otherwise dispose of any of its material assets or properties (other than Intellectual Property), except (A) to the extent Parent shall otherwise give its prior consent in writing (for sales, leases, licenses or other dispositions in the case ordinary course of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), business and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth for sales, leases, licenses or other dispositions of assets and properties with a fair market value not in Section 4.1(aexcess of $100,000 in the aggregate;
(v) issue, sell, grant or authorize the issuance, sale or grant of any shares of capital stock or other securities of the Company Disclosure Schedule, or any of its Subsidiaries (C) as may be required other than issuances by applicable Legal Requirementsa wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company), or (D) as expressly required by this Agreementany options, warrants, convertible securities, subscription rights or other similar rights entitling its holder to receive or acquire any shares of such capital stock or other securities of the Company shall or any of its Subsidiaries other than grants to employees, directors and consultants of the Company in the ordinary course of business of Company Options collectively having an aggregate number of underlying shares of Company Common Stock not (and shall not permit any to exceed 400,000 shares of Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company SubsidiaryCommon Stock;
(iivi) reclassify, split, combine, subdivide, changeredeem or repurchase, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or options, warrants or securities convertible or exchangeable into or exercisable for any Company Subsidiaryshares of its capital stock;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of enter into any Company Subsidiary, other than dividends or distributions only agreement with respect to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting of its capital stock;
(ivviii) acquire (by mergermake any loans, consolidationadvances, operation of law, acquisition of stock, other equity interests guarantees or assets, formation of a joint venture capital contributions to or otherwise) (A) any other Person, (B) any equity interest investments in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or any direct or indirect wholly-owned Subsidiary of the Company), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property than in the ordinary course of business;
1 Note (ix) incur any Indebtedness for borrowed money or guarantee any such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to W&S: Subject to ongoing review by the Company.
(v) except in connection with acquire any transaction between debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $100,000 in the aggregate;
(x) make or commit to make capital expenditures other than in an amount not in excess of $100,000, in the aggregate;
(xi) enter into any Contract that would have been a manner consistent Company Material Contract had it been entered into prior to the Execution Date, other than in the ordinary course of business;
(xii) amend or modify in any material respect or terminate any Company Material Contract, or waive or release any material rights, claims or benefits under any Company Material Contract, in each case, other than in the ordinary course of business;
(xiii) make any material changes with past practice respect to its accounting policies or procedures, except as required by changes in Law or GAAP;
(xiv) settle any Proceeding, except in the ordinary course of obsolete equipment business or assets where such settlement is covered by insurance or involves only the payment of monetary damages in an amount not more than $250,000 in the aggregate;
(xv) except in the ordinary course of business consistent with past practice; (B) pursuant , file any material amended Tax Return, make, revoke or change any material Tax election in a manner inconsistent with past practice, adopt or change any material Tax accounting method or period, enter into any agreement with a Governmental Entity with respect to written Contracts material Taxes, settle or commitments existing as of the date of this Agreement; or (C) as security for compromise any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers examination, audit or other third parties action with a Governmental Entity of or relating to any material Taxes or settle or compromise any claim or assessment by a Governmental Entity in respect of material Taxes, or enter into any Tax sharing or similar agreement (excluding any commercial contract not primarily related to Taxes), in each case, to the extent such action could reasonably be expected to have a Material Adverse Effect on Parent;
(xvi) except in the ordinary course of business or pursuant to the terms of any Company Benefit Plan in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares effect as of the Company’s Execution Date or any Company Subsidiary’s capital stock or equity interestsas required by Law, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares increase the annual salary or consulting fees or target annual cash bonus opportunity, of any Company Common Stock repurchased from employees Employee with an annual salary or consultants or former employees or consultants consulting fees and target annual cash bonus opportunity in excess of $100,000 as of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or Execution Date, (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercisebecome a party to, vesting or settlement of Company Optionsestablish, as applicableadopt, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defeaseamend, or cancel terminate any indebtedness for borrowed money, guarantee material Company Benefit Plan or any such indebtedness, issue or sell any debt securities or rights arrangement that would have been a material Company Benefit Plan had it been entered into prior to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B)this Agreement, (C)) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, (D) forgive any loans or issue any loans (other than routine travel advances issued in the ordinary course of business) to any Company Employee, (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of hire any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee engage any independent contractor (who is a natural person) with annual salary or consulting fees and target annual cash bonus opportunity in excess of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, $100,000 or (EF) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 who would be an “executive officer” (as defined in Rule 3b-7 of the Exchange Act) other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigationsell, claimassign, suitlease, action or proceedingexclusively license, except for settlements or compromises other than (A) the paymentpledge, discharge or satisfactionencumber, in the ordinary course of business in a manner consistent with past practicedivest, of liabilities reflected or reserved against in the Most Recent Company Balance Sheetabandon, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IPIntellectual Property, other than in its reasonable business judgment or grants of non-exclusive licenses in the ordinary course of business in a manner consistent with past practice, to customers for use of the products or (B) authorize the disclosure to any third party services of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(iixviii) splitbecome a party to, combineestablish, subdivideadopt, changeamend, exchange, amend the terms of commence participation in or reclassify enter into any shares of Parent’s capital stock collective bargaining or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiarieslabor union Contract;
(iiixix) declarefail to use commercially reasonable efforts to keep current and in full force and effect, set asideor to comply with the requirements of, make or pay to apply for or renew, any dividend permit, approval, authorization, consent, license, registration or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid certificate issued by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities Governmental Entity that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets is material to the conduct of the business of the Company and the Company its Subsidiaries, taken as a whole, except in each case, ;
(1xx) acquisitions by Parent from file any wholly owned Parent Subsidiary prospectus supplement or among registration statement or consummate any wholly owned Parent Subsidiaries; (2) offering of securities that requires registration under the purchase of equipment, supplies and inventory Securities Act or that includes any actual or contingent commitment to register such securities under the Securities Act in the ordinary course future;
(xxi) fail to maintain, cancel or materially change coverage under, in a manner materially detrimental to the Company or any of businessits Subsidiaries, any insurance policy maintained with respect to the Company and its Subsidiaries and their assets and properties;
(xxii) enter into any material new line of business outside of the business currently conducted by the Company and its Subsidiaries as of the Execution Date;
(xxiii) enter into any Contract that would have been a Company Related Party Transaction had it been entered into prior to the Execution Date; or
(3xxiv) inbound licenses enter into any Contract, or other grants otherwise become obligated, to do, or assignments authorize, any of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Sources: Merger Agreement (Monterey Capital Acquisition Corp)
Interim Operations. 1
(a) The Company agrees that, during Between the period from Signing Date and the date Closing Date or the earlier termination of this Agreement through the earlier of the Closing or the termination of this Agreementin accordance with Article X, except (1x) to for the extent Parent shall otherwise give its prior consent Restructuring or the Pre-Closing Distribution each in writing (such consent not to be unreasonably withheld, conditioned or delayed)accordance herewith, (2y) as set forth in Section 4.1(a) of the Company Disclosure Schedule, on Schedule 7.1 or (3z) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required by this Agreement, unless Buyer has previously expressly consented in writing or to the extent required by applicable Law, each Seller and Parent Company will, and will cause each other member of the Company shallGroup to, (i) conduct its operations in the Ordinary Course of Business and in accordance with applicable Law, and shall cause the Company Subsidiaries to, (ii) use commercially reasonable efforts to conduct its business in (A) preserve and maintain the ordinary course of current business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) , assets, properties, organization and goodwill of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed)Group, (B) maintain books, accounts and records of the Company Group in accordance with past practice and (C) preserve and maintain the present relationships with customers, suppliers, Governmental Authorities, lenders and others having business dealings with the Company Group.
(b) Without limiting the foregoing, between the Signing Date and the Closing Date or the earlier termination of this Agreement in accordance with Article X, except (x) in connection with the Restructuring and the Pre-Closing Distribution, (y) as set forth in Section 4.1(a) of the Company Disclosure Schedule, on Schedule 7.1 or (Cz) as may be required by applicable Legal Requirements, or (D) as otherwise expressly required by this Agreement, unless Buyer has previously expressly consented in writing or to the extent required by applicable Law, Sellers and the Parent Companies shall not, and shall cause each other member of the Company shall Group not (and shall not permit to, do any Company Subsidiary to):of the following:
(i) amend the Company’s Organizational Documents or amend (A) make any amendment, modification, change to the Organizational Documents of any member of the Company Group (or waive compliance with any material provision thereof) or (B) form any new Subsidiary;
(ii) (A) authorize, issue, pledge, suffer any security interests on, assign, transfer, or sell any Equity Interests of the Company Group or other rights to purchase or otherwise acquire for any such Equity Interests of the Company Group or (B) split, combine, subdivideredeem, changerecapitalize, exchange, amend the terms reclassify or subdivide any Equity Interests of or reclassify any shares of the Company’s capital stock or other equity interests member of the Company Group or make any Company Subsidiarycommitments to do any of the foregoing with respect to any Equity Interests;
(iii) declaresubject to any Liens (other than Permitted Liens), set asidesell, make assign, transfer, license (other than granting non-exclusive licenses to customers in the Ordinary Course of Business), sublicense, abandon, allow to lapse or pay expire, or otherwise dispose of, or fail to enforce, maintain, or protect any dividend material Company Group IP or other distribution (whether payable amended or modified in cash, stock any material respect any existing Contract or property) rights with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any material Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiaryGroup IP;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) merge or consolidate with any other Person, (B) acquire any equity interest in any Equity Interests, business, line of business, other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business organization or division thereof, or all or substantially all of the assets, of another Person, in a single transaction or a series of related transactions; (C) make any investment or capital contribution in or loan to any other Person or business; (D) enter into any material assets exceptjoint venture, partnership or similar venture with any Person; (1E) acquisitions by restructure, reorganize or adopt a plan or agreement of liquidation, dissolution, merger, consolidation or other reorganization or (F) dispose of, lease, transfer, surrender, abandon, waive, lapse or release any asset, right, claim, debt or property, tangible or intangible, of the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) Group which is material to the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessas a whole;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except (A) amend or modify in connection any material and adverse respect (including of payment terms), cancel, terminate or initiate the termination (other than termination due to expirations of such Contracts in accordance with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares their terms) of, or securities convertible waive or exchangeable forassign any material right, claim or benefit under, any Material Contract, or options(B) enter into a Contract which, warrants had it been entered into prior to the Signing Date, would have been a Material Contract or rights to acquireReal Property Lease, any shares of its capital stock or other equity interestsin each case, other than shares in the Ordinary Course of Company Common Stock issuable upon exercise of outstanding Company OptionsBusiness;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales amend or modify in any material and adverse respect (including of inventorypayment terms), goods cancel, terminate or services in initiate the ordinary course of business in a manner consistent with past practice termination of, or of obsolete equipment waive or assets in the ordinary course of business consistent with past practice; assign any material right, claim or benefit under, any Specified Contract or Real Property Lease. or (B) pursuant enter into a Contract which, had it been entered into prior to written Contracts the Signing Date, would have been a Specified Contract or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practiceReal Property Lease;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares accelerate the collection of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or accounts receivable, (B) shares delay the payment of Company Common Stock accepted as payment for accounts payable or accrued expenses, or (C) delay the exercise price purchase of Company Options supplies or for withholding Taxes incurred in connection with the exercisedelay material capital expenditures, vesting repairs or settlement of Company Options, as applicablemaintenance, in accordance with the terms each case of the applicable awardforegoing clauses (A)-(C), outside of the Ordinary Course of Business;
(viii) incur (grant or announce any new award of, increase the amount of, or accelerate of the timing of funding, payment or vesting of, any cash, equity or equity-based incentive, severance, change in control, retention, transaction or other bonus, salary, or other compensation or benefit of any current or former employee, officer, director, or other individual service provider of any member of the Company Group other than draws (x) with respect to discretionary bonuses in the Ordinary Course of Business or (y) as required by Law, any existing agreement in effect as of the Signing Date and set forth on existing revolving loansSchedule 4.10(a), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries existing terms of any Employee Plan in respect thereofeffect as of the Signing Date and set forth on Schedule 4.10(a);
(ix) enter into, establish, adopt, terminate, amend or modify any Employee Plan or any other benefit or compensation plan, policy, program, contract, agreement or arrangement that would be an Employee Plan if in effect as of the Signing Date, other than with respect to discretionary bonuses in the Ordinary Course of Business or as required by Law;
(x) (A) adopthire, promote or engage, or otherwise enter into any employment or consulting agreement or arrangement with any individual whose annualized compensation opportunities exceeds or would reasonably be expected to exceed $200,000, or (B) terminate, other than for cause, the employment or service of any current or former employee, officer, director or other service provider whose annualized compensation opportunities exceeds or would reasonably be expected to exceed $200,000;
(xi) (A) modify, extend, negotiate, terminate or amend enter into any Company Plan except to the extent permitted by clauses (B), (C), (D) Labor Agreement or (E) of this Section 4.1(a)(ix), (B) increaserecognize or certify any labor union, labor organization, works council or accelerate group of employees as the vesting or payment of, the compensation or benefits of bargaining representative for any member employees of the Company BoardGroup;
(xii) implement or announce any employee layoffs, furloughs, reductions in force, plant closings, reductions in compensation or other similar actions, in each case, that would trigger notice obligations under the WARN Act;
(xiii) waive or release any noncompetition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current employee, or former employee or independent contractor of the Company or any Company Subsidiary, Group;
(Cxiv) grant any rights to severance, retention(A) make (outside the Ordinary Course of Business), change in control or termination pay rescind any U.S. federal income Tax entity classification election with respect to any member of the Company Board, current employee or former employee of the Company Group or any Company Subsidiary, (D) hire or promote any employee at or other material election relating to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause)Taxes; except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)adopt, change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, except as required by GAAP; (C) settle or compromise any material liability for Taxes U.S. federal, state or any local or non-U.S. Tax auditLiability, claim, dispute or other proceeding relating assessment with respect to a any material amount of Taxes, ; (D) amend any income or other material Tax Return; (E) enter into any closing agreement or similar agreement with any Taxing Authority; (F) waive or consent to an extension of a Governmental Entity relating statute of limitations period applicable to Taxes if such agreement would reasonably be expected any Tax claim, assessment or deficiency; (G) fail to result in a pay any material Tax liability, request when due and payable or otherwise incur any Tax ruling from material penalties or interest in respect of any Governmental Entity, Tax; or (H) surrender any right to claim a material Tax refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) surrender any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebymaterial Tax asset;
(xv) enter into make any agreement, understanding or arrangement with respect material change to the voting accounting methods, principles or practices of any capital stock or other equity interests member of the Company (including any voting trust)Group, other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement except as may be required by GAAP or changes in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersLaw;
(xvi) adopt a plan of (A) complete issue, create, incur, assume, guarantee, endorse, refinance or partial liquidation of otherwise become liable or responsible with respect to (whether directly, contingently or otherwise) any indebtedness for borrowed money or other Company Group Debt, other than (i) to the Company extent paid in full or any Company Subsidiary otherwise discharged prior to the Closing, or (Bii) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, reflected in the case Estimated Closing Statement and determination of clause (B), transactions between or among direct or indirect wholly owned Company SubsidiariesEstimated Closing Date Cash Payment therein;
(xvii) settle make any investments in or compromise loans to or enter into or modify any litigationContract with any Related Persons outside of the Ordinary Course of Business;
(xviii) subject to any Lien or otherwise encumber or permit, claimallow or suffer to be encumbered, suit, action or proceeding, except for settlements or compromises other than (A) any of the paymentmaterial properties or material assets owned, discharge used or satisfactionoccupied by the Company Group, in the ordinary course of business in other than a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance SheetPermitted Lien, or (B) those that do not (x) impose the Equity Interests of any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part member of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policiesGroup, other than Securities Liens;
(xix) settle or compromise any pending or threatened Action against any member of the Company Group (A) amend or for which any member of the Company Permits Group would be financially responsible), whether or not commenced prior to the Signing Date, other than settlements of any pending or threatened Action in the Ordinary Course of Business for payment of amounts less than $50,000 individually; provided, that no settlement of any pending or threatened Action may involve any injunctive or equitable relief, or impose material restrictions on any member of the Company Group, or admit wrongdoing, or be with respect to a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permitscriminal matter;
(xx) (A) fail make or authorize capital expenditures for property, plant and equipment, except those otherwise in an aggregate amount for all such capital expenditures not to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or exceed $100,000 in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceaggregate;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make arrangement that would purport to bind or impose a restrictive covenant on (other than customary confidentiality obligations), or otherwise materially limit the operations of, Buyer or any commitment of its Affiliates following the consummation of the Closing (including the Company Group);
(xxii) cause or intentionally allow any Permit to be cancelled, revoked, terminated, or suspended; or
(xxiii) agree to take any of the actions described in clauses (i) through (xxixx) of above. Nothing contained in this Section 4.1(a).
(b) Parent agrees that, during the period from the date of 7.1 or elsewhere in this Agreement through the earlier shall preclude any Parent Company, in its sole discretion, from (i) using available Cash to pay indebtedness, transaction expenses, cash dividends or distributions, or (ii) assuming, settling, cancelling, or otherwise terminating any or all of the Closing Company Group’s obligations, receivables, payables, loans or other intercompany accounts between any Seller and/or any member of the termination Company Group. In addition, nothing contained in this Agreement shall give Buyer, directly or indirectly, the right to control or direct the business or operations of any member of the Company Group prior to the Closing. Prior to the Closing, each member of the Company Group shall exercise, consistent with the terms and conditions of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, complete control and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct supervision over its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessoperations.
Appears in 1 contract
Sources: Purchase Agreement (Gogo Inc.)
Interim Operations. 1
(a) The Company covenants and agrees that, during the period from after the date of this Agreement through hereof and prior to the earlier of the Closing Effective Time and the date, if any, of which this Agreement is earlier terminated pursuant to Article VI, its business and the business of its Subsidiaries shall be conducted in the ordinary course of business consistent with past practice. To the extent consistent with the foregoing sentence, the Company and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of the Company and its Subsidiaries. Nothing in the foregoing sentences shall prohibit or restrict the termination Company and its Subsidiaries from taking any of the following actions: (i) actions approved by Parent in writing (which approval shall not be unreasonably delayed, and Parent agrees to consider in good faith any actions to be taken by the Company for which such approval is being sought from Parent by the Company), (ii) any action expressly required or expressly not prohibited by this Agreement; and (iii) any action required by Law (including any requirement of the SEC). Without limiting the generality of the foregoing and in furtherance thereof, from the date hereof until the earlier of the Effective Time and the date, if any, on which this Agreement is earlier terminated pursuant to Article VI, except (A) as otherwise expressly required or expressly not prohibited by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayeddelayed and Parent agrees to consider in good faith any actions to be taken by the Company for which such approval is being sought from Parent by the Company), (2C) as set forth in Section 4.1(a3.1 of the Company Disclosure Letter or (D) as required by any applicable Laws (including any requirement of the SEC), the Company will not and will not permit its Subsidiaries to:
(a) adopt or propose any change in its certificate of incorporation or by-laws or other applicable governing instruments;
(b) acquire or agree to acquire (i) by merging or consolidating with, or by purchasing a substantial portion of the stock, or other ownership interests in, or substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association, joint venture, limited liability company or other entity or division thereof or (ii) any assets that would be material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole, except, in each case, (x) purchases of supplies, equipment, services and inventory in the ordinary course of business consistent with past practice and (y) any Permitted Acquisition;
(c) restructure, recapitalize, reorganize or completely or partially liquidate the Company or any of its Subsidiaries or adopt a plan of complete or partial liquidation with respect to the Company or any of its Subsidiaries or adopt resolutions providing for or authorizing any of the foregoing;
(d) except as set forth in Section 4.1(d) of the Company Disclosure ScheduleLetter, (3) as may be required by applicable Legal Requirementsother than shares of Class A Common Stock issuable under the Company Stock Plans issue, sell, pledge, dispose of, grant, transfer, encumber, or (4) as expressly required by this Agreementauthorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or Encumbrance of, any shares of capital stock of the Company shall, and shall cause or any its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of the Company Subsidiaries toto the Company or another wholly owned Subsidiary), use commercially reasonable efforts or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to conduct its acquire any shares of such capital stock or such convertible or exchangeable securities;
(e) make any loans, advances (except for advances to employees in respect of travel and business expenses) or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company) other than in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiarybusiness consistent with past practice;
(iif) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iiii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock (except for dividends or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent distribution paid (x) by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Subsidiary of the Company Subsidiaryand (y) on the Shares declared by the Company Board of Directors in accordance with the Company’s stated dividend policy consistent with past practice, including, but not limited to, (A) those certain dividends declared by the Company Board of Directors on May 10, 2007 in respect of the Shares and payable June 1, 2007 in an aggregate amount not to exceed $16,029,100 and (B) those certain dividends payable on September 1, 2007 in respect of outstanding shares of Class A Common Stock, and (C) those certain dividends declared on or after November 1, 2007 and payable only in the event the transactions contemplated by this Agreement are not consummated on or prior to November 30, 2007 or (ii) enter into any agreement with respect to the voting of its capital stock;
(ivg) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity transactions involving direct or indirect wholly owned Subsidiaries of the Company, reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities that constitute short term investments that are accounted convertible or exchangeable into or exercisable for as cash equivalents), any shares of its capital stock other than pursuant to the Company Stock Plans;
(Ch) incur any business indebtedness for borrowed money or division guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries, except for indebtedness for borrowed money (Di) incurred pursuant to agreements in effect prior to the date hereof, provided that the Company shall not incur any material assets exceptadditional indebtedness under the Credit Agreement without the prior consent of Parent, (1ii) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory incurred in the ordinary course of business consistent with past practices not to exceed $1,000,000 in the aggregate or (3iii) inbound licenses guarantees incurred in compliance with this Section 4.1 by the Company or any of its direct or indirect wholly owned Subsidiaries of indebtedness of any direct or indirect wholly owned Subsidiary of the Company;
(i) fail to pay when due (after taking into account any applicable grace periods and notice requirements) all interest due and payable on the Company’s indebtedness incurred prior to the date hereof;
(j) except (i) as set forth in the capital budgets previously made available to Parent or its Affiliates (and set forth in the Company Disclosure Letter) and consistent therewith, or (ii) in connection with one or more Permitted Acquisitions, make or authorize any capital expenditures in excess of $2,000,000 in the aggregate;
(k) except as set forth in Section 4.1(k) of the Company Disclosure Letter, make any changes with respect to accounting policies or procedures, except as required by Law or changes in applicable generally accepted accounting principles;
(l) except as set forth in Section 4.1(l) of the Company Disclosure Letter, settle or compromise any pending or threatened material suit, action, claim or litigation or other grants proceedings before a Governmental Entity other than the settlement or assignments compromise of Intellectual Property any such suit, action, claim or litigation or other proceedings (A) in the ordinary course of business consistent with past practice and (B) reflected or reserved against in the financial statements of the Company for the period ended December 31, 2006, but only to the extent that the amount of such settlement or compromise is not materially in excess of such reflected or reserved amount;
(m) other than in the ordinary course of business consistent with past practice, make or change any material Tax election, or settle or finally resolve any Tax contest with respect to a material amount of Tax;
(n) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, product lines or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) , except in connection with any transaction between the Company for obsolete assets and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiariesexcept for sales, issueleases, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock licenses or other equity interestsdispositions of assets with a fair market value not in excess of $2,500,000 in the aggregate, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionspursuant to Contracts in effect prior to the date hereof;
(vio) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services than in the ordinary course of business in a manner consistent with past practice or as required by applicable Law, materially amend, modify, supplement, waive or terminate (other than termination in accordance with their terms) or enter into any Material Contract;
(p) except (w) as required pursuant to existing written, binding agreements in effect prior to the date hereof, (x) as required by any Employee Benefit Plan in each case listed on Section 3.1(h) of obsolete equipment the Company Disclosure Letter, (y) as set forth in Section 4.1(p) of the Company Disclosure Letter, or assets (z) as otherwise required by applicable Law, (i) grant or provide any new severance or new termination payments or new material benefits to any existing director, officer or employee of the Company or any of its Subsidiaries, (ii) increase the compensation, bonus or pension, welfare, severance or other benefits of or pay any bonus to any officer, employee or director of the Company, other than such increases which in the aggregate would not result in payments in excess of $1,800,000 in any given fiscal year of the Company including (A) increases made to hourly employees of the Company or any of its Subsidiaries in the ordinary course of business consistent with past practice, (B) increases in payments of sales commissions by the Company or any of its Subsidiaries resulting from adjustments to the Company’s sales commission plans as in effect on the date hereof; provided that, for the avoidance of doubt, payments of sales commissions by the Company or any of its Subsidiaries made in the ordinary course of business consistent with past practice and in accordance with the Company’s sales commission plans as in effect on the date hereof shall be permitted under this Agreemrnt, (C) making any new equity awards to any director, officer or employee of the Company or any of its Subsidiaries or (D) increases in quarterly bonuses to regional vice presidents made in the ordinary course of business consistent with past practice; (B) pursuant provided that any quarterly bonus payments to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties regional vice presidents made in the ordinary course of business consistent with past practice not exceeding $100,000 in a the aggregate shall be permitted under this Agreement, (iii) grant or pay any transaction-related bonuses or make any other similar payments, whether or not in cash, in connection with the transactions contemplated hereby, (iv) establish, adopt, amend or terminate any Benefit Plan or amend the terms of any outstanding equity-based awards, (v) subject to the terms of this Agreement, take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Benefit Plan, to the extent not already provided in any such Benefit Plan, (vi) change any actuarial or other assumptions used to calculate funding obligations with respect to any Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; or (vii) forgive any loans to directors, officers or, outside the ordinary course of business consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxiiq) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through and until the Effective Time or the earlier of the Closing or the termination of this AgreementAgreement in accordance with its terms (the “Pre-Closing Period”), except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2w) as set forth in Section SECTION 4.1(a) of the Company Disclosure ScheduleLetter, (3) as may be required by applicable Legal Requirements, or (4x) as expressly required by this Agreement, (y) to the extent consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned) or (z) as required by applicable Law, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts its Subsidiary to conduct the business of it and its business Subsidiary in the ordinary course of business; provided that any action expressly permitted by business in all material respects and, to the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of extent consistent therewith, it shall, and shall cause its Subsidiary to, use their commercially reasonable efforts to preserve their business organizations intact, maintain their assets and properties and their relationships and goodwill with Governmental Entities, customers, suppliers, distributors, employees and other Persons having business dealings with the Company Disclosure Schedule) will not constitute a violation or its Subsidiary, and keep available the services of its current officers, key managers and other employees and consultants, all as necessary to conduct their business in the ordinary course; provided, however, for the avoidance of doubt, the Company shall in no event be required to increase compensation to employees or consultants or pay any special bonuses in connection with the foregoing. Notwithstanding the generality of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) and subject to the extent Parent shall otherwise give its prior consent exceptions set forth in writing clauses (in the case of subsections (iv), (vi), (viii), (ixw), (x), (xii)y) and (z) of the immediately preceding sentence, (xiii)the Company shall not, and shall not permit its Subsidiary to:
(xviii) amend, supplement or modify (A) the certificate of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned incorporation or delayed), bylaws (B) as set forth in Section 4.1(aor comparable formation and governing documents) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or its Subsidiary or (DB) as expressly required by this Agreement, any policy related to Personal Data or the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents operation or amend the Organizational Documents security of any Company Subsidiarymaterial IT Assets in any manner that would materially weaken the security or protection thereof;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify acquire any shares of the Company’s capital stock or other equity interests in, or assets of the Company any business or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution division (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture consolidation or otherwise) (A) any other Personfrom, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or its Subsidiary of the Company), (C) any business except for purchases of inventory, services, products or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property materials in the ordinary course of business;
1 Note (iii) merge or consolidate with any other Person or restructure, reorganize, dissolve, wind-up or completely or partially liquidate the Company or its Subsidiary or take any similar action;
(iv) issue, sell, pledge, dispose of, or subject to W&S: Subject any Lien, any Equity Interests, except for issuances of Shares pursuant to ongoing review by Company Stock Options outstanding on the Company.date of this Agreement under the Stock Incentive Plans;
(v) except split, combine, subdivide, recapitalize, reclassify or effect any similar change in connection with capitalization of any transaction between of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company OptionsEquity Interests;
(vi) except declare, accrue, set aside, establish a record date for, or pay any dividends on, or make any other distributions in connection with any transaction between respect of, the Equity Interests of the Company and any wholly owned Company Subsidiary (other than those paid in cash prior to the Reference Time);
(vii) repurchase, redeem or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on otherwise acquire any of its material tangible property or tangible assetsthe Equity Interests, except for redemptions, purchases or acquisitions pursuant to the exercise or settlement of Company Permitted EncumbrancesStock Options or the exercise of any contractual repurchase rights existing on the date of this Agreement;
(viii) incur, suffer to exist, guarantee or otherwise dispose of (by mergerbecome liable with respect to any Indebtedness, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services except for short term working capital borrowings incurred in the ordinary course of business under the Credit Facilities;
(ix) divest, sell, convey or transfer, or create or incur any Lien (other than Permitted Liens) on, any of the assets of the Company or its Subsidiary, other than sales of products or non-exclusive licenses granted by the Company or its Subsidiary in a manner consistent with past practice the ordinary course of business;
(x) (A) increase in any respect the compensation or benefits of obsolete equipment any (1) Company Employee other than as expressly required pursuant to applicable Law or assets the terms of Company Plans in effect on the date of this Agreement that are set forth in SECTION 4.1(a)(x)(A) of the Company Disclosure Letter or (2) Company Employees (other than any Company Employee whose salary is equal to or less than $100,000 in the ordinary course of business consistent with past practice; ), (B) pursuant to written Contracts establish, adopt, enter into, modify, supplement, amend or commitments existing terminate any Company Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Plan if it were in existence as of the date of this Agreement; or Agreement (C) other than as security for any borrowings permitted expressly required by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if as in effect on the date of this Agreement that has been made available to Parent), (C) take any action to accelerate the vesting or payment of or to fund any benefit or payment to any Company Employee, except as contemplated pursuant to SECTION 2.4 of this Agreement or (D) pay or agree to pay any pension, retirement allowance or other employee benefit, including any severance, change in control, retention, transaction or termination payment to any Company Employee other than those included as Transaction Expenses (as contemplated pursuant to SECTION 4.7(d) of this Agreement) as required by law or pursuant to the terms of Company Plans in effect on the date of this Agreement that are set forth in SECTION 4.1(a)(x)(D)(2) of the Company Disclosure Letter, would constitute a Material Contract(E) grant any equity or equity-based awards to, or discretionarily accelerate the vesting or payment of any such awards held by any Company Employee, (F) hire any executive-level employee or (G) terminate any executive-level employee other than for cause;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree make, change or revoke any Tax election, file any amended Tax Return, settle or compromise any Tax liability, enter into any closing agreement with respect to an any Tax or surrender any right to claim a Tax refund, consent to any extension or waiver of the statute limitation period applicable to any Taxes, or change the Company’s or its Subsidiary’s method of limitations with respect to a material amount of Taxesaccounting for Tax purposes, unless required by applicable Law;
(xiiixii) except as required by GAAP or applicable Law, make any changes to its accounting policies or principles;
(A) other than consignment of Company Products in the ordinary course of business, make enter into any capital expenditure Contract that is not contemplated by the capital expenditure budget (the “CapEx Budget”would have been a Company Material Contract pursuant to SECTION 3.1(q)(i) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added had it been entered into prior to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would notor (B) terminate, or materially amend, or waive any material rights under, any Company Material Contract, except for any such termination upon the expiration of such Company Material Contract in accordance with its terms; provided in each case that the aggregateCompany and its Subsidiary shall be permitted to extend, exceed the aggregate CapEx Budget by renew or replace any Company Material Contract with one or more than $100,000Contracts on substantially similar terms;
(xiv) except as for the capital expenditures expressly required by applicable Legal Requirements or approved in the Company’s Organizational Documents, convene (ACompany capital expenditures budget set forth in SECTION 4.1(a)(xiv) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting Disclosure Letter, make or (B) authorize any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebycapital expenditure;
(xv) enter into any agreement, understanding except (A) as provided in SECTION 4.17 or arrangement (B) with respect to the voting settlement of any capital stock an Action if such settlement imposes no liability or other equity interests of obligation on the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or payment of money damages that do not exceed the amounts accrued in connection with the granting of revocable proxies in connection with any meeting MSA Litigation on the unaudited consolidated balance sheet of the Company’s shareholdersCompany and its Subsidiary as of March 31, 2017 with respect to such Action, or $15,000 individually or $45,000 in the aggregate with respect to other Actions, (1) cancel, compromise, settle or agree to settle any material claims, (2) waive or release any material right with respect to any Action or (3) commence or settle any Action;
(xvi) adopt a plan of (A) complete delay or partial liquidation postpone any payment of any accounts payable or other payables or expenses from the Company or any Company Subsidiary or date such payments would be made consistent with past practice, (B) dissolution, merger, consolidation, division, restructuring, recapitalization accelerate or other reorganization, other than, delay the collection of accounts receivable in advance of or beyond the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) date when the payment, discharge or satisfaction, same would have been collected in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against (C) make any material change in the Most Recent Company Balance Sheetconduct of its business, or any material change in the methods of purchase, sale, lease, management, marketing, promotion or operation of its business;
(Bxvii) those invest in, make any capital contributions to, or otherwise acquire the securities or other equity interests of, any Person that do is not (x) impose any injunctive relief on the Company or any Company a Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company SubsidiaryCompany;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain form any material existing insurance policiesnew Subsidiary;
(xix) (A) amend cancel or fail to renew any of the Company Permits in a manner that adversely impacts the Company’s ability Insurance Policies or fail to conduct its business in any material respect maintain commercially reasonable levels of insurance coverage provided by such Company Insurance Policies or (B) terminate or allow fail to lapse any material Company Permitsmaintain its insurance coverage, pay premiums, and report claims to the insurance carrier upon their occurrence;
(xx) act, or fail to act, in any manner that would (A) reasonably be expected to result in any loss, lapse, abandonment, invalidity or unenforceability of any material Intellectual Property owned or purported to be owned by the Company or its Subsidiary, or (B) cause the Company or its Subsidiary to be obligated to place any proprietary source code in escrow;
(xxi) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to creditor any material Company Registered IP or otherwise abandon, cancel, or permit amount owed to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practicesuch creditor when due;
(xxixxii) take enter into any agreement, arrangement or cause to be taken transaction with any actionof their respective directors, officers, or knowingly fail to take Stockholders (or cause to be taken with any actionrelative, which action beneficiary, spouse or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning Affiliate of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedsuch Persons); or
(xxiixxiii) agree, authorize, approve resolve, commit or enter into any agreement or make any commitment consent to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of Nothing contained in this Agreement through is intended to give Parent or Merger Sub, directly or indirectly, the earlier of right to control or direct the Closing or Company’s operations prior to the termination Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, except (1) to the extent the Company shall otherwise give complete control and supervision over its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition SubsSubsidiary’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessrespective operations.
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing (such approval not to be unreasonably withheld, delayed or conditioned)), and except as otherwise expressly contemplated by this Agreement or required by applicable Laws, the Company and its Subsidiaries shall cause the business of it and its Subsidiaries to be conducted in the ordinary course consistent with past practice and, to the extent consistent therewith, it and its Significant Subsidiaries shall use their respective reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates. Without limiting the generality of the foregoing, and in furtherance thereof, from the date of this Agreement through until the earlier of the Closing Effective Time, except (A) as otherwise contemplated or the termination of specifically permitted by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2C) as is reasonably responsive to a requirement of applicable Law or any Governmental Entity or (D) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, will not and shall cause the Company will not permit its Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to)::
(i) amend the Company’s Organizational Documents adopt any change in its certificate of incorporation or amend the Organizational Documents of any Company Subsidiarybylaws or other applicable governing instruments;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person;
(iii) make any acquisition of assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $30 million in any transaction or series of related transactions, combineother than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(iv) issue, subdividesell, changepledge, exchangedispose of, amend grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than (A) the issuance of Shares upon the settlement of performance units, restricted stock awards and other awards under the Stock Plans (and dividend equivalents thereon, if applicable) or (B) the issuance of shares by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company) in excess of $30 million in the aggregate;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or (except (A) regular quarterly dividends paid to holders of Shares in the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only ordinary course consistent with past practice (including with respect to the extent record dates for such dividends) in an amount not to exceed $0.03 per Share, and (B) dividends paid by any wholly direct or indirect wholly-owned Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, other than the acquisition of stockany Shares tendered by current or former employees or directors in order to pay Taxes in connection with the settlement of performance units, restricted stock awards and other equity interests or assets, formation awards under the Stock Plans and other than in connection with a customary cashless exercise of a joint venture or otherwiseCompany Options);
(viii) (A) incur, issue, modify, renew, syndicate or refinance any other Person, (B) any equity interest in any other Person Indebtedness (other than investments any letters of credit issued in equity securities that constitute short term investments that are accounted for as cash equivalents)the ordinary course of business, (C) the refinancing of any business or division existing Indebtedness of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses provided that such refinancing Indebtedness so incurred must be voluntarily prepayable without premium, penalties or other grants or assignments costs in excess of Intellectual Property $2 million in the aggregate) and any Contracts relating to interest rate protection, swap agreements and collar agreements entered into in the ordinary course of business;
1 Note ; provided, that the Company shall consult in good faith with Parent prior to W&S: Subject entering into, amending or otherwise modifying, or agreeing in principle to, any Contract relating to ongoing review by the Company.
(v) except in connection with or reflecting any transaction between hedging arrangement that is material for the Company and any wholly owned Company Subsidiary its Subsidiaries taken as a whole) having an outstanding principal amount in excess of (1) $5 million per individual incurrence or among any wholly owned Company Subsidiaries(2) $50 million in the aggregate, issueprovided that, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquirein each case, any shares of its capital stock Indebtedness so incurred must be voluntarily prepayable without premium, penalties or other equity interests, costs or (B) enter into any swap transaction other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; provided, that the Company shall consult in good faith with Parent prior to entering into, amending or otherwise modifying, or agreeing in principle to, any Contract relating to or reflecting any hedging arrangement that is material for the Company and its Subsidiaries taken as a whole;
(Bix) pursuant to written Contracts or commitments existing except as set forth in the capital budgets set forth in Section 6.1(a)(ix) of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties Company Disclosure Schedule in the ordinary course of business in a manner consistent with past practicepractice or for expenditures related to operational emergencies, make or authorize any capital expenditure in excess of $50 million in the aggregate;
(viix) directly make any material changes with respect to financial or indirectly repurchaseTax accounting policies or procedures, redeem except as required by applicable Law or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred by changes in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable awardGAAP;
(viiixi) incur settle any litigation or other proceedings before a Governmental Entity (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions with respect to any other PersonTax audits, except litigation or proceedings) for any indebtedness among an amount in excess of $10 million individually or $30 million in the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)aggregate;
(ixxii) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation practice or benefits except to the extent required pursuant to by Law, make any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedulematerial Tax election;
(xxiii) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract settlement, compromise or closing agreement thatwith respect to any material Tax liability or Tax refund, if file any amended Tax Return with respect to any material Tax, or waive or extend the statute of limitations in effect respect of material Taxes;
(xiv) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material amount of assets, product lines or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, other than pursuant to Contracts in force on the date of this Agreement, transactions solely among the Company and/or its wholly-owned Subsidiaries that would constitute not result in a Material Contract;
(xi) change any material increase in the Tax liability of the Company and its methods of financial accounting Subsidiaries or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)business and other than pursuant to Contracts in effect prior to the date of this Agreement;
(xv) except as required pursuant to agreements in effect prior to the date of this Agreement or as otherwise required by applicable Law, change (A) grant or revoke provide any material Tax election, change severance or termination payments or benefits to any Tax accounting period director or material method employee of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes the Company or any Tax audit, claim, of its Subsidiaries except with respect those employees who are not executive officers of the Company or other proceeding relating to a material amount any Subsidiary of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than the Company in the ordinary course of businessbusiness consistent with past practice, agree (B) increase the compensation to an extension any director or waiver employee of the statute Company or any of limitations its Subsidiaries in excess of the 2010 amounts budgeted with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products thereto on the date hereof and otherwise in the ordinary course of businessbusiness consistent with past practice, make (C) establish, adopt, terminate or materially amend any capital expenditure Benefit Plan (other than routine changes to welfare plans) or any plan, program, arrangement, policy or agreement that is not contemplated by would be a Benefit Plan if it were in existence on the capital expenditure budget date hereof or (D) grant any equity or equity-based awards, except that (1) the Company may grant time-based restricted stock units in respect of no more than 1,227,270 Shares to employees of the Company and its Subsidiaries, other than those employees who are eligible to receive grants under the Company’s Long-Term Incentive Program on the date hereof (such employees, the “CapEx BudgetLTIP Eligible Employees”), in the ordinary course of business and consistent with past practices with respect to the allocation of awards and otherwise subject to the terms of Section 6.1(e) set forth below, (2) the Company may grant performance-based restricted stock unit awards in respect of no more than 590,909 shares under the Company’s Long Term Incentive Program with respect to the 2010-2011 performance cycle to LTIP Eligible Employees in the ordinary course of business and consistent with past practices with respect to the allocation of awards and otherwise subject to the terms of Section 4.1(a)(xiii6.1(f) below and (3) the Company may grant PERS awards for 2010 to the individuals listed on Section 6.1(a)(xv)(D)(3) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)Schedule, except in respect of no more than 104,545 shares, in the ordinary course of business and consistent with past practices with respect to the allocation of awards; provided, however, that the Company or any Company a Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than may make offers of employment to newly hired non-executive employees in the ordinary course of business consistent with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection past practice that are not inconsistent with the granting terms of revocable proxies in connection with any meeting of the Company’s shareholdersthis subsection (xv);
(xvi) adopt a plan or agreement of (A) complete or partial liquidation or dissolution of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company its Significant Subsidiaries;
(xvii) settle or compromise grant any litigation, claim, suit, action or proceeding, except for settlements or compromises Lien other than Permitted Liens and except in connection with Indebtedness permitted under Section 6.1(a)(viii);
(xviii) (A) the paymententer into any Collective Bargaining Agreement or other similar agreement with any labor union, discharge works council or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, other collective bargaining organization or (B) those that do not (x) impose engage in information and consultation with any injunctive relief on works council or similar organization in relation to reductions in force or workforce restructuring, which materially increases the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part financial obligations of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policiesits Subsidiaries;
(xix) (A) amend in the case of Subsidiaries of the Company which are organized in jurisdictions other than a state of the United States, make any investment in debt or equity securities issued by the Company Permits in or any of its Subsidiaries organized under the laws of a manner that adversely impacts state of the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company PermitsUnited States;
(xx) (A) fail permit any of its Subsidiaries or Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to pay promise, authorize or make any issuancepayment to, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandoncontribute any item of value to, canceldirectly or indirectly, or permit to lapse any material Company Registered IPnon-U.S. official, other than in its reasonable business judgment or each case, in violation of the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;FCPA; or
(xxi) take agree, authorize or cause commit to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in do any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees shall not knowingly take or permit any of its Affiliates to take any action that could reasonably be expected to prevent or delay in any material respect the consummation of the Merger.
(c) If the Company identifies any activities of the Company or any of its Subsidiaries, including those activities of their respective directors, officers, managers, employees, independent contractors, representatives or agents, that the Company reasonably believes (following due inquiry) to be in violation of the FCPA, the Company shall and shall cause each of its Subsidiaries and Affiliates to cease such activities. The Company shall and shall cause its Subsidiaries and Affiliates to take all actions required by law to remediate any actions taken by the Company, its Subsidiaries or Affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA.
(d) The Company shall (i) give Parent prompt notice of any inquiry, in any form, written or oral, from the PBGC or The Pensions Regulator with respect to any Benefit Plan that is subject to Title IV of ERISA or any Non-U.S. Benefit Plan located in the United Kingdom, as applicable, (ii) permit Parent to participate in all negotiations and proceedings with, or initiated by, such entities, (iii) control such negotiations and any settlements, provided, however, that, during without Parent’s consent, which shall not unreasonably be withheld, the period from Company may not commit itself under this Section 6.1(d) to any material obligations, whether effective prior to or after the Closing; and further provided, that the Company shall cooperate with Parent and shall take all actions reasonably requested to facilitate communication and negotiations, if reasonably determined by Parent to be appropriate, with the trustees of the Foreign Pension Plan in the United Kingdom between the date of this Agreement through hereof and the earlier Effective Time.
(e) The Company agrees that any awards granted pursuant to Section 6.1(a)(xv)(D)(1) above shall vest in equal installments on each of the Closing or first four anniversaries and shall provide, and shall require the termination grantee of such award as a condition to the receipt of such award to agree, that, notwithstanding any provision of this Agreement, except (1) any other agreement or plan to the extent contrary, upon a “change in control” (which shall include the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayedconsummation of the transactions contemplated by this Agreement), (2) as subject to the grantee remaining employed on such date, the award shall vest pro-rata based on number of months that have elapsed from January 1, 2010 through and including the month in which the change in control occurs relative to 48 months and shall further provide that any portion of the award that is unvested at the time such change in control occurs shall terminate with no consideration due to the grantee. The portion of the grant document relating to the terms and conditions set forth in this Section 4.1(b6.1(e) and matters associated therewith shall be subject to the review of and consent by Parent, which shall not be unreasonably withheld.
(f) The Company agrees that any awards granted pursuant to Section 6.1(a)(xv)(D)(2) above shall vest in equal installments on each of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shallfirst two anniversaries and shall provide, and shall cause require that the Parent Subsidiaries tograntee of such award as a condition to the receipt of such award to agree, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination notwithstanding any provision of this Agreement, except (A) any other agreement or plan to the extent contrary, upon a “change in control” (which shall include the consummation of the transactions contemplated by this Agreement), subject to the grantee remaining employed on such date, the award shall vest pro-rata based on number of months that have elapsed from January 1, 2010 through and including the month in which the change in control occurs based on target performance and shall further provide that any portion of the award that is unvested at the time such change in control occurs relative to 24 months shall terminate with no consideration due to the grantee. The Company shall further require that the grantee of such award agree as a condition to the receipt of such award that in no event shall Section 4(d) of the Company’s Long Term Incentive Program apply to such award. The portion of the grant document relating to the terms and conditions set forth in this Section 6.1(f) and matters associated therewith shall be subject to the review of and consent by Parent, which shall not be unreasonably withheld.
(g) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Parent and the Company shall otherwise give its prior consent in writingexercise, (B) as set forth in Section 4.1(b) consistent with the terms and conditions of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (complete control and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company supervision over its and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessits Su
Appears in 1 contract
Sources: Merger Agreement (Ims Health Inc)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through hereof and until the earlier of the Closing or the termination of this Agreement, except Agreement pursuant to its terms or the Effective Time (1) to the extent Parent unless Buyer shall otherwise give its prior consent in writing (approve, such consent approval not to be unreasonably withheld, conditioned or delayedwithheld if the request relates to any matters other than those described in clauses (i), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iviii), (vi), (viii), (ixiv), (x), (xiixi), or (xv) below), except as otherwise expressly contemplated by this Agreement and except as required by applicable Laws, the business of the Company and its Subsidiaries shall be conducted in the ordinary course consistent with past practices and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, material customers, suppliers, distributors, key employees and business associates and keep available the services of its and its Subsidiaries’ present key employees, to maintain all of its material operating assets in their current condition (normal wear and tear excepted) and to maintain and preserve its business organization and its material rights and franchises. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, except (1) as otherwise expressly required by this Agreement, (2) upon at least twenty-four hours prior written notice delivered to Buyer (if feasible), as may be required by applicable Laws (including the rules of NASDAQ), (xiii), and (xvii3) of this Section 4.1(a)as Buyer may approve, such consent approval not to be unreasonably withheld, conditioned or delayedwithheld if the request relates to any matters other than those matters described in clauses (i), (Biii), (iv), (x), (xi), or (xv) below, or (4) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementLetter, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents adopt a plan of complete or amend the Organizational Documents partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of any Company Subsidiarysuch entity;
(ii) split, combine, subdivide, change, exchange, amend the terms enter into any new line of or reclassify any shares of the Company’s capital stock or business outside its existing business segments (other equity interests of the Company or any Company Subsidiarythan as permitted by clause (vi));
(iii) (A) amend its articles of incorporation, by-laws or other applicable governing instruments; (B) split, combine, subdivide or reclassify its outstanding shares of capital stock; (C) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or propertyproperty in respect of any capital stock; (D) with respect to enter into, amend or modify any shareholder rights agreement, rights plan, “poison pill” or other similar agreement or instrument; or (E) repurchase, redeem or otherwise acquire any shares of the Company’s its capital stock or the any securities convertible into or exchangeable or exercisable for any shares of its capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only (except pursuant to the extent paid forfeiture of Company Options, Company Restricted Shares or Common Stock Units or the acquisition by any wholly owned Company Subsidiary to the Company of Company Shares in settlement of the exercise price of a Company Option or another wholly owned Tax withholding obligations of holders of Company SubsidiaryOptions, Company Restricted Shares or Common Stock Units);
(iv) merge or consolidate itself or any of its Subsidiaries with, acquire all or substantially all of the assets of, or acquire all or a substantial portion of any equity or voting interests of any other Person, except for any such transactions among its wholly-owned Subsidiaries, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations or businesses (other than as permitted by clause (vi));
(v) form any Subsidiary of the Company or any of its Subsidiaries;
(vi) acquire any business, whether by merger, consolidation, operation purchase of lawproperty or assets or otherwise (valuing any non-cash consideration at its fair market value as of the date of the agreement for such acquisition); provided that neither the Company nor any of its Subsidiaries shall make any acquisition that would, acquisition of stockor would reasonably be expected to prevent, other equity interests delay or assetsimpair the Company’s ability to consummate the transactions contemplated by this Agreement; (vii) incur, formation of a joint venture prepay, repurchase, assume or otherwise) (A) materially modify any other Person, (B) indebtedness for borrowed money or guarantee any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any of its debt securities or of any of its Subsidiaries, except for (DA) any material assets except, indebtedness for borrowed money (1x) interest rate swaps on customary commercial terms consistent with past practice and in compliance with its risk management policies in effect on the date of this Agreement or relating to acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipmentCompany, supplies and inventory collectively in an amount not to exceed $10,000,000 in the ordinary course of business aggregate, or (3y) inbound in replacement of existing indebtedness for borrowed money, or (B) guarantees incurred in compliance with this Section 6.1 by it of indebtedness of its wholly-owned Subsidiaries;
(viii) make or commit to any capital expenditures materially in excess of the aggregate amount reflected in the Company’s capital expenditure budget for the period in which such capital expenditures are made;
(ix) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any of its material assets, Intellectual Property, product lines or businesses or of its Subsidiaries, including capital stock of any of its Subsidiaries, other than pursuant to Contracts in effect as of the date of this Agreement or sales or licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(vx) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant pledge, dispose of, grant, transfer, encumber, or otherwise permit authorize or agree to become outstanding the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any additional shares ofof capital stock, or any other equity or voting interest of the Company or of any its Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary to it or another of its wholly-owned Subsidiaries), or securities convertible or exchangeable forinto or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire, acquire any shares of its such capital stock stock, or other equity interestssuch convertible or exchangeable securities, other than shares of Company Common Stock issuable upon in connection with the exercise of outstanding the Top-Up Option or any Company OptionsOptions issued as of the date hereof;
(vixi) make any change with respect to accounting policies or procedures, except as required by changes in GAAP or by Law;
(xii) except as required by Law, (A) make, revoke or change any material Tax election or take any material position on any material Tax Return filed on or after the date of this Agreement or adopt any material method therefor that is inconsistent with elections made, positions taken or methods used in connection with preparing or filing similar Tax Returns in prior periods or (B) settle or resolve any transaction between material Tax controversy;
(xiii) make any material loans, advances or capital contributions to or investments in any Person (other than the Company and or any direct or indirect wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company);
(xiv) enter into any non-competition Contract or other Contract that limits in any material respect either the type of business in which the Company or its Subsidiaries (or, other thanafter the Effective Time, Buyer or its Affiliates) may engage or the manner or locations in which any of them may so engage in any business;
(xv) except as required pursuant to Contracts in effect as of the date of this Agreement, or as otherwise required by this Agreement or applicable Law: (A) sales grant or provide any severance or termination payments or benefits to any of inventoryits directors, goods officers or services employees; (B) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards, except as provided in Section 6.1(a)(x) above, to any of its directors, officers or employees (other than increases in compensation in connections with new-hires and promotions, compensation adjustments in the ordinary course of business consistent with the normal annual review cycle of the Company and payment of bonuses in a manner the ordinary course of business and consistent with past practice practices); provided however, the Company may establish a cash retention program comprised of up to $375,000 in aggregate payments to employees of the Company who remain employed by the Company for at least 12 months following the Closing Date, provided that such amount will increase by $250,000 to a total of $625,000 in aggregate payments if the Offer Closing has not occurred within 90 days from the date hereof, and thereafter Buyer will reasonably consider an additional increase to such amount as reasonably requested by the Company; (C) establish, adopt, amend or terminate any Company Compensation and Benefit Plan or amend the terms of any outstanding equity-based awards; (D) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Compensation and Benefit Plans, to the extent not already provided in any such Company Compensation and Benefit Plan; (E) change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Compensation and Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; or (F) forgive any loans to any of its or of obsolete equipment any of its Subsidiaries’ directors, officers or assets employees;
(xvi) adopt or enter into any collective bargaining agreement, works council agreement, or other labor union Contract applicable to the employees of the Company or any of its Subsidiaries;
(xvii) take any action or omit to take any action that would reasonably be expected to result in any of the conditions of the Offer set forth on Exhibit A or to the Merger set forth in Article VII not being satisfied or intended to prevent, delay or materially impair the ability of the Company to consummate or otherwise impede, interfere or be inconsistent with the Offer, the Merger or any transactions contemplated thereby;
(xviii) settle any litigation in any forum or any dispute, or any administrative or other proceedings before or threatened to be brought before a Governmental Entity, including but not limited to any claims of shareholders and any shareholder litigation relating to this Agreement or any transaction contemplated by this Agreement or otherwise, other than settlements solely for monetary compensation and/or the provision of services and/or products by the Company with an aggregate value of less than $500,000;
(xix) disclose any confidential or proprietary information of the Company or any of its Subsidiaries other than pursuant to a confidentiality agreement restricting the right of the recipient thereof to use and disclose such confidential or proprietary information;
(xx) fail to keep in force any material insurance policy or replacement or revised provisions providing insurance coverage with respect to the assets, operations and activities of the Company and its Subsidiaries as are currently in effect;
(xxi) except in the ordinary course of business consistent with past practice; , (BA) pursuant to written Contracts enter into any Contract that would constitute a Material Contract, or commitments existing as of the date of this Agreement; or modify, amend (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course case of business modifications or amendments, in a manner consistent with past practice;
(vii) directly or indirectly repurchasethat is, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity intereststaken as a whole, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant adverse in to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (DSubsidiaries) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract , or (B) waive, release or assign any material rights or claims under any Material ContractsContract;
(xxii) convene any annual or special meeting (or any adjournment thereof) of the shareholders of the Company other than the Shareholders Meeting (if such a meeting is required by this Agreement and applicable Law); or
(xxiii) agree, authorize or commit to do any of the foregoing.
(iib) enter into any Contract or agreement that, if in effect on Within ten days of the end of each month after the date of this Agreement, would constitute a Material Contract;
the Company covenants and agrees to provide Buyer with written notice of (xii) change any of its methods of financial accounting indebtedness for borrowed money incurred, prepaid, repurchased, assumed, materially modified or accounting practices guaranteed in compliance with Section 6.1(a)(vii) during the prior month, (ii) any action taken under Section 6.1(a)(xii) during the prior month because required by Law, (iii) any material respect other than as required by changes loans, advances or capital contributions to or investments in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make permitted by Section 6.1(a)(xiii) during the prior month, (iv) any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made action taken during the prior month permitted under Section 6.1(a)(xv) because it was required by the Company and the Company Subsidiaries since Contracts in effect as of the date of this the Agreement would notor Law, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (Av) any special meeting increases in compensation during the prior month permitted under Section 6.1(a)(xv)(B), (vi) the name and title of any employee receiving a retention payment during the Company’s shareholders other than prior month permitted under Section 6.1(a)(xv)(B) and the Company Shareholder Meeting or amount of such payment, (Bvii) any other meeting settlement of litigation during the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trustprior month permitted under Section 6.1(a)(xviii), other than with respect to awards under (viii) any action taken during the Company Equity Plans otherwise prior month which is permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xviSection 6.1(a)(xxi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, because it was in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (zix) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance all new employees hired and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, promotions during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessmonth.
Appears in 1 contract
Sources: Merger Agreement (NCR Corp)
Interim Operations. 1
(a) The Company agrees thatshall, during the period and shall cause each of its Subsidiaries to, from and after the date of this Agreement through until the earlier of the Closing or Effective Time and the termination of this AgreementAgreement pursuant to Article VIII, except (1) to the extent unless Parent shall otherwise give its prior consent approve in writing (such consent not to be unreasonably withheldwriting, conditioned or delayed), (2) and except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required by this Agreement, required in order to comply with applicable Law or required in order to comply with COVID-19 Measures or deemed advisable by the Company shallCompany, and shall cause acting reasonably, in connection with the Company Subsidiaries totermination or modification of COVID-19 Measures, use commercially reasonable efforts to conduct its business in the ordinary course Ordinary Course of business; provided that any action expressly permitted by Business, in all material respects, and, to the remaining provisions extent consistent therewith, shall use and cause each of this Section 4.1(a) (including Section 4.1(a) its Subsidiaries to use their commercially reasonable efforts to maintain its and its Subsidiaries’ relations and goodwill with Governmental Entities, customers, suppliers, distributors, and employees. Without limiting the generality of and in furtherance of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period foregoing sentence, from the date of this Agreement through until the earlier of the Closing or Effective Time and the termination of this AgreementAgreement pursuant to Article VIII, except (i) as otherwise expressly required (A) by this Agreement, (B) by any Governmental Entity, (C) to comply with (1) applicable Law, or (2) the terms of any Material Contract binding on the Company or any of its Subsidiaries in effect prior to the extent Parent shall otherwise give its prior consent date of this Agreement, (ii) as approved in writing by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheldconditioned, conditioned withheld or delayed), ) or (Biii) as set forth in the corresponding subsection of Section 4.1(a6.01(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend the Company’s adopt any change in its Organizational Documents or amend the Organizational Documents of any Company SubsidiaryDocuments;
(ii) splitmerge or consolidate with any other Person, combine, subdivide, change, exchange, amend the terms of or reclassify except for any shares such transactions solely among Wholly Owned Subsidiaries of the Company’s Company or transactions permitted by Section 6.01(a)(iii), or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its properties, assets, operations or businesses;
(iii) (A) acquire by merger or consolidation with, or (B) without the prior written consent of Parent (not to be unreasonably conditioned, withheld or delayed), purchase any, all or substantially all of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;
(iv) transfer, sell, lease, license, divest, cancel, abandon, allow to lapse or expire, or otherwise dispose of, or incur, permit or suffer to exist the creation of any Encumbrance (other than any Permitted Encumbrances) upon, any material properties or assets (tangible or intangible, including any Intellectual Property Rights), product lines or businesses of the Company or any of its Subsidiaries, including capital stock or other equity interests of any of its Subsidiaries, except in connection with (A) sales of obsolete assets (not including Intellectual Property Rights), (B) sales, leases, or other dispositions of inventory, rental fleet or other goods (not including Intellectual Property Rights) in the Ordinary Course of Business and (C) non-exclusive licenses of Intellectual Property Rights entered into in the Ordinary Course of Business;
(v) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, Encumber or otherwise enter into any Contract or other agreement, understanding or arrangement with respect to the voting of, any shares of capital stock of the Company (including, for the avoidance of doubt, Shares) or capital stock or other equity interests of any of its Subsidiaries, securities convertible or exchangeable into or exercisable for any such shares of capital stock or other equity interests, or any options, warrants or other rights of any kind to acquire any such shares of capital stock, other equity interests or such convertible or exchangeable securities (other than the issuance of shares of such capital stock, other equity securities, or convertible or exchangeable securities (A) by a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company or (B) in respect of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms and the applicable Stock Plan in effect on the Capitalization Date);
(vi) make any loans or advances of money to any Person (other than the Company and its Subsidiaries), except for advances to employees or officers of the Company or any Company of its Subsidiaries pursuant to any advancement obligations under the Company’s or any Subsidiary’s Organizational Documents or indemnification agreement in effect on the date hereof or for expenses incurred in the Ordinary Course of Business;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s capital stock or the its capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only interests (including with respect to the extent Company, for the avoidance of doubt, Shares), except for (A) dividends paid by any wholly owned Company Wholly Owned Subsidiary to the Company or another wholly owned to any other Wholly Owned Subsidiary of the Company Subsidiaryor (B) dividends required to be paid with respect to the Series B Preferred Stock or the Series C Preferred Stock pursuant to the Series B Certificate of Designation or the Series C Certificate of Designation, respectively;
(ivviii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by mergeror offer to redeem, consolidationpurchase or otherwise acquire, operation directly or indirectly, any of law, acquisition of its capital stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interestsinterests (including with respect to the Company, for the avoidance of doubt, Shares), other than shares the withholding or use of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between Shares to satisfy the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets payment of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to exercise price on the exercise of repurchase rights existing prior to the date of this Agreement; a Company Option or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with Tax obligations upon the exercise, vesting or settlement of Company OptionsEquity Awards outstanding as of the date of this Agreement, in each case, in accordance with their terms and, as applicable, the Stock Plans as in effect on the Capitalization Date;
(ix) adopt or implement any stockholder rights plan or similar arrangement;
(x) form any Subsidiary or enter into any joint venture, partnership, limited liability corporation, strategic alliance or similar arrangement;
(xi) incur any Indebtedness (including the issuance of any debt securities, warrants or other rights to acquire any debt security), except for (A) Indebtedness in replacement of existing Indebtedness for borrowed money on terms substantially consistent with or more favorable to the Company than the Indebtedness being replaced; (B) Indebtedness pursuant to the Company’s existing credit facilities listed on Section 6.01(a)(xi) of the Company Disclosure Schedule as in effect as of the date hereof; (C) Indebtedness for capitalized leases (including finance or operating leases), or Indebtedness in respect of the deferred and unpaid purchase price of property or equipment, in each case incurred in the Ordinary Course of Business, provided that such Indebtedness may not exceed $2,500,000 in the aggregate; (D) Indebtedness incurred (1) by the Company that is owed to any Wholly Owned Subsidiary or (2) by any Wholly Owned Subsidiary that is owing to the Company or any other Wholly Owned Subsidiary; or (E) guarantees of Indebtedness of its Wholly Owned Subsidiaries otherwise incurred in compliance with this Section 6.01(a);
(xii) make or authorize any payment of, or accrual or commitment for, capital expenditures, except (A) those contemplated by the Company’s capital expenditure forecast for the relevant fiscal year, which capital expenditure forecast has been made available to Parent prior to the date of this Agreement, and (B) any unforecasted capital expenditure, with respect to this clause (B) in an amount not to exceed $5,000,000 in the aggregate;
(xiii) enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement, other than Contracts with customers or suppliers entered into in the Ordinary Course of Business;
(xiv) other than with respect to Material Contracts related to Indebtedness, which shall be governed by Section 6.01(a)(vi) and Section 6.01(a)(xi), terminate, not renew (by exercising an applicable non-renewal right, or by not exercising an applicable renewal right), or in any material respect amend or otherwise modify or waive, or assign, convey, Encumber or otherwise transfer, in whole or in part, rights or interest pursuant to or in, any Material Contract, other than expirations or non-renewals of any such Contract in the Ordinary Course of Business and in accordance with the terms of such Contract with no further action by the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments Company or any of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Personits Subsidiaries, except for any indebtedness among ministerial actions;
(xv) cancel, modify or waive any debts or similar claims held by the Company or any of its Subsidiaries having in each case a value in excess of $500,000 individually or $1,000,000 in the aggregate;
(xvi) amend any License contemplated by Section 4.05(d) in any material respect, or allow any such License to lapse, expire or terminate (except where the lapse, expiration or termination of any such License is with respect to a License that has become obsolete, redundant or no longer required by applicable Law);
(xvii) other than with respect to Transaction Litigation, any Proceeding in connection with, arising out of or otherwise related to a demand for appraisal under Section 262 of the DGCL or any Tax claim, audit, assessment or dispute, which shall be governed by Section 6.11, Section 3.02(f) and Section 6.01(a)(xix), respectively, settle or compromise any Proceeding for an amount in excess of $500,000 in the aggregate, or which would reasonably be expected to (A) prevent, materially delay or materially impair the consummation of the transactions contemplated by this Agreement, (B) have a materially negative impact on the operations and reputation of the Company and its wholly owned Company Subsidiaries or among (C) involve any wholly owned Company Subsidiaries (and guarantees criminal liability, any admission of material wrongdoing or any material wrongful conduct by the Company or the Company Subsidiaries in respect thereof)any of its Subsidiaries;
(ixxviii) (A) adoptmake any changes with respect to accounting policies or procedures, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xiixix) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change any an annual Tax accounting period period, adopt or material method of Tax accounting, amend change any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityaccounting method, settle or compromise file any material liability for Taxes or any amended Tax audit, claim, or other proceeding relating to a material amount of TaxesReturn, enter into any closing agreement with a Governmental Entity relating respect to Taxes if such agreement would reasonably be expected to result in a material Taxes, settle any material Tax liabilityclaim, request any Tax ruling from any Governmental Entityaudit, assessment or dispute, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of businessrefund, agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax, or take any action which would be reasonably expected to result in a material amount increase in the Tax liability of Taxesthe Company or its Subsidiaries, or, in respect of any taxable period (or portion thereof) ending after the Closing Date, the Tax liability of Parent or its Affiliates;
(xiiixx) other than consignment except as required pursuant to the terms of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since Benefit Plan in effect as of the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except or as expressly required by applicable Legal Requirements Law or the Company’s Organizational Documentsterms of this Agreement, convene (A) increase in any special meeting manner the compensation or consulting fees, bonus, or other benefits, severance or termination pay of the Company’s shareholders any current or former director, officer, employee or other than the Company Shareholder Meeting or service provider, (B) become a party to, establish, adopt, amend, commence participation in or terminate any other meeting of the Company’s shareholders to consider a proposal Company Benefit Plan or any arrangement that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter have been a Company Benefit Plan had it been entered into any agreement, understanding or arrangement with respect prior to the voting date of any capital stock or other equity interests of the Company (including any voting trust)this Agreement, other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with routine, immaterial or ministerial amendments to health and welfare plans that do not materially increase benefits or result in a material increase in administrative costs, (C) grant any new awards, or amend or modify the granting terms of revocable proxies any outstanding awards (including, in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the each case, Company or Equity Awards), under any Company Subsidiary Benefit Plan, (D) take any action to accelerate the vesting or (B) dissolutionlapsing of restrictions or payment, merger, consolidation, division, restructuring, recapitalization or fund or in any other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) way secure the payment, discharge of compensation or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or benefits under any Company Subsidiary (other than confidentiality obligations)Benefit Plan, (yE) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability change any actuarial or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail other assumptions used to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due calculate funding obligations with respect to any material Company Registered IP Benefit Plan that is required by applicable Law to be funded or otherwise abandonchange the manner in which contributions to such plans are made or the basis on which such contributions are determined, cancelexcept as may be required by GAAP, (F) forgive any loans or permit issue any loans to lapse any material Company Registered IPcurrent or former director, officer, employee or other service provider (other than in its reasonable business judgment or routine travel advances issued in the ordinary course Ordinary Course of business Business), (G) hire any employee or engage any independent contractor (who is a natural person) with total cash compensation (an annual salary or wage rate or consulting fees and target annual cash bonus opportunity) in a manner consistent with past practiceexcess of $175,000, or (BH) authorize terminate the disclosure to any third party employment of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, employee other than in the ordinary course of business in a manner consistent with past practicefor cause;
(xxi) take become a party to, establish, adopt, amend, commence participation in or cause to be taken terminate any actioncollective bargaining agreement or other agreement with a labor union, labor organization, works council or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedsimilar organization; or
(xxii) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as Nothing set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through shall give Parent, directly or indirectly, the earlier of right to control or direct the Closing Company’s or the termination of this Agreement, except (A) its Subsidiaries’ operations prior to the extent Effective Time or give the Company shall otherwise give its prior consent in writingCompany, (B) as set forth in Section 4.1(b) of directly or indirectly, the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, right to control or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend direct the Parent’s or either of the Acquisition Subsits Subsidiaries’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect operations prior to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessEffective Time.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through hereof until the earlier of the Closing Date or the termination date, if any, on which this Agreement is terminated pursuant to Section 9.1 (the "Termination Date"), the Significant Vendors shall cause the Companies to: (i) conduct the Business only in the Ordinary Course of this AgreementBusiness; and (ii) use their reasonable efforts (x) to preserve intact the business organization and goodwill of the Business, (y) to maintain the Companies’ relationships with their respective Clients, brokers, insurance underwriters, Potential Counterparties and other Persons having business dealings with the Companies and (z) to keep available the services of the key Business Employees.
(b) Without limiting the generality of the foregoing, except (1) to the extent Parent shall otherwise give its prior consent as expressly permitted by this Agreement or as approved in writing by the Purchaser (such consent which approval shall not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through hereof until the earlier of the Closing Time or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and Significant Vendors shall not permit any Company Subsidiary to)::
(i) amend or otherwise change its Organizational Documents, other than the Company’s Organizational Documents or amend filing of articles of amendment to increase the Organizational Documents maximum number of any Company Subsidiarydirectors of Omega Holdings to 21;
(ii) splitauthorize, combineissue, subdivide, change, exchange, amend the terms of sell or reclassify transfer any shares of the Company’s share capital stock or other equity interests of the such Company or any Company Subsidiarysecurities convertible into or exercisable or exchangeable for share capital or other equity interests of such Company, or adjust, split or reclassify any share capital or other equity interests of such Company;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or other property) with in respect to of any shares of the Company’s share capital stock or the capital stock or other equity interest interests of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiarysuch Company;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests merge or assets, formation of a joint venture or otherwise) (A) consolidate with any other Person, (B) Person or acquire any equity interest in business or assets of any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentswhether by merger, stock purchase, asset purchase or otherwise), (C) or form any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesssubsidiary;
1 Note to W&S: Subject to ongoing review by the Company.
(v) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(vi) make any material change in the operation of the Business, except such changes as may be required to comply with any Applicable Law;
(vii) make, authorize or make any commitment with respect to, any single capital expenditure that is in excess of $10,000 or capital expenditures that are, in the aggregate, in excess of $25,000;
(viii) except in connection with operations in the Ordinary Course of Business and upon terms not materially adverse to such Company, amend in any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares ofmaterial respect, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, terminate (other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viiiits terms) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract , or (B) waive, release or assign any material rights under or claims thereunder;
(ix) except in connection with operations in the Ordinary Course of Business and upon terms not materially adverse to such Company, enter into any Material ContractsContract (A) that has a term of, or requires the performance of any obligations over a period, in excess of one year, or (iiB) enter into that cannot be terminated without penalty on less than three (3) months’ notice;
(x) sell, lease (as lessor), transfer or otherwise dispose of, or mortgage, encumber, pledge or impose any Contract Lien on, any of its assets or agreement thatproperties, if other than (A) pursuant to existing contracts disclosed to the Purchaser, and (B) dispositions of immaterial assets or properties for fair value in effect on the date Ordinary Course of this Agreement, would constitute a Material ContractBusiness;
(xi) change create, incur, assume or guarantee any of its methods of financial accounting Indebtedness, or accounting practices in extend or modify any material respect other than as required by changes in GAAPexisting Indebtedness;
(xii) make any loans, advances or capital contributions to, or investments in, any Person (except for elections made other than advances of expenses to Business Employees and, in the ordinary course case of businessOmega General, passive investments, in each case in the Ordinary Course of Business);
(xiii) cancel any debts owed to, change or revoke waive any material Tax electionclaims or rights held by, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if the such amendment would reasonably be expected to result in a material Tax liabilityCompany;
(xiv) (A) commence, settle or compromise any material liability for Taxes Action by or against such Company arising in the Ordinary Course of Business (including in relation to Actions arising under Insurer Contracts) where the amount claimed under any Tax audit, claim, such Action exceeds $100,000 or other proceeding relating to a material where the settlement or compromise of any such Action requires the payment of monetary damage in an aggregate amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) commence, settle or compromise any other meeting Action by or against such Company arising outside of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent Ordinary Course of Business where the amount claimed under any such Action exceeds $25,000 or delay where the consummation settlement or compromise of any such Action requires only the transactions contemplated herebypayment of monetary damage in an aggregate amount of more than $25,000;
(xv) incur expenses (including legal or other professional fees) in excess of $25,000 in the aggregate in connection with any ongoing, new or proposed Action involving or relating to such Company (other than expenses, including legal and other professional fees) incurred in connection with Actions arising under Insurer Contracts in the Ordinary Course of Business);
(xvi) except as required by Applicable Law or any existing Contract or Employee Benefit Plan in effect on the date hereof, (A) institute or announce any increase in the compensation, bonuses or other benefits payable to any of its executive employees, (B) enter into or amend any employment, consulting, severance or change of control agreement with any such Person, or (C) enter into, adopt or amend any Employee Benefit Plan;
(A) hire any new executive employee or make an offer of employment to any person for an executive employee position, (B) engage any consultant or independent contractor or (C) except in the Ordinary Course of Business, promote any current employee;
(xviii) enter into any transaction with any of its Affiliates, except transactions that are at prices and on terms and conditions not less favorable to such Company than could be obtained on an arm’s-length basis from unrelated third parties and except for transactions solely between one or more of the Companies;
(xix) make any change in the accounting methods, principles or policies applied in the preparation of the Financial Statements, other than any change required by Applicable Law or a change in GAAP;
(xx) fail to file any material Tax Return when due or pay any material Tax when due (other than Taxes being contested in good faith), or make or change any Tax election;
(xxi) fail to pay any accounts payable when due or within a reasonable period of time thereafter (other than amounts being contested in good faith) or fail to use commercially reasonable efforts to collect any accounts receivable when due;
(xxii) fail to renew or otherwise keep in full force and effect any material License relating to the Business; or
(xxiii) enter into any agreement, commitment or understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock written or propertyoral) with respect to any shares of Parent’s capital stock the foregoing except where any of the foregoing is solely between one or more of the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessCompanies.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees thatIn furtherance of, during and without limiting, the period foregoing Section 6.2, from the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except (w) as otherwise expressly contemplated by this Agreement, except (1x) to the extent as expressly required by applicable Law, (y) as Parent shall otherwise give its prior consent may approve in writing (such consent which approval shall not to be unreasonably withheld, conditioned or delayed), ) or (2z) as set forth in Section 4.1(a) 6.3 of the Company MLP Disclosure ScheduleLetter, each of the MLP Entities (3and with respect to Section 6.3(a) as may be required by applicable Legal Requirementsbelow, or (4GP Holdings) as expressly required by this Agreement, the Company shall, will not and shall cause the Company will not permit any of MLP’s Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that and GP Holdings will not permit any action expressly permitted by the remaining provisions of this Section 4.1(aMLP Group Entity to, directly or indirectly:
(a) (i) issue (including Section 4.1(aissuing any certificate in connection therewith), grant, sell or otherwise permit to become outstanding, or authorize the creation of, any additional Equity Interests (whether “phantom” or otherwise) or any additional Rights, including transactions between or among the MLP Group Entities or (ii) certificate any existing Partnership Interests;
(b) (i) split, combine or reclassify any of its Equity Interests or issue or authorize or propose the Company Disclosure Scheduleissuance of any other securities in respect of, in lieu of or in substitution for its Equity Interests, (ii) will not constitute a violation repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries to purchase, redeem or otherwise acquire any membership, partnership or other Equity Securities or (iii) enter into any Contract with respect to the foregoing. During the period from the date voting of this Agreement through the earlier its Partnership Interests or other Equity Securities;
(c) (i) sell, transfer, lease, or otherwise dispose of, or encumber all or any portion of the Closing its assets, business or the termination of this Agreementproperties, except for (A) to the extent Parent shall otherwise give its prior consent in writing (in the case sales, transfers and dispositions of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned obsolete or delayed)worthless equipment, (B) as set forth in Section 4.1(a) sales, transfers and dispositions of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (inventory and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory produced hydrocarbons in the ordinary course of business or (3C) inbound licenses sales, transfers, assignments, conveyances, abandonment, allowances to lapse, licenses, sublicenses, covenants not to assert or other grants or assignments disposals of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; , (Bii) pursuant to written Contracts acquire, by merger or commitments existing as otherwise, or lease any assets or securities or all or any portion of the date business or property of this Agreement; or any other Person, other than (Cx) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties acquisitions of goods and services in the ordinary course of business in a manner consistent with past practice;
practice and (viiy) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company acquisitions pursuant to which the exercise of repurchase rights existing prior to the date of this Agreement; aggregate value exchanged or (B) shares of Company Common Stock accepted as payment for the exercise purchase price of Company Options paid or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel payable by any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds MLP Group Entity would not exceed $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, 2,000,000 in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business,
Appears in 1 contract
Sources: Merger Agreement
Interim Operations. 1
(a) The Company Each of the Partnership and Parent covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Effective Time (unless Parent or the termination of this AgreementPartnership, except (1) to the extent Parent as applicable, shall otherwise give its prior consent approve in writing (such consent which approval shall not to be unreasonably withheld, conditioned or delayed)), (2) and except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as otherwise expressly required contemplated by this Agreement, as provided in any Contract in effect as of the Company shalldate of this Agreement, or as required by applicable Law, the business of it and its Subsidiaries shall cause be conducted in the Company Ordinary Course and, to the extent consistent therewith, it and its Subsidiaries to, shall use their respective commercially reasonable efforts to conduct its preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates. Without limiting the generality of and in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation furtherance of the foregoing. During the period , from the date of this Agreement through until the earlier Effective Time, except as otherwise expressly: (a) contemplated by this Agreement; (b) contemplated by any Contract entered into prior to, concurrently with or after the date of this Agreement by Parent with respect to the Closing Other Parent Transactions (as such Contract may be amended, supplemented or otherwise modified from time to time); (c) required by applicable Law or the termination terms of this Agreementany Partnership Material Contract or Parent Material Contract, except as applicable; (Ad) to the extent Parent shall otherwise give its prior consent as approved in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent which approval shall not to be unreasonably withheld, conditioned or delayed), ) by the other Party; or (Be) as set forth in the corresponding subsection of Section 4.1(a) 8.1 of the Company Partnership Disclosure ScheduleLetter, (C) as may be required by applicable Legal Requirementsit relates to the Partnership and its Subsidiaries, or (D) in Section 8.1 of the Parent Disclosure Letter, as expressly required by this Agreementit relates to Parent and its Subsidiaries, the Company each Party, on its own account, shall not (and shall not permit any Company Subsidiary its Subsidiaries to)::
(i) amend make any material change to the Company’s Organizational Documents or amend the Organizational Documents nature of any Company Subsidiaryits business and operations;
(ii) splitmake any change to its Organizational Documents as in effect on the date of this Agreement in any manner that would reasonably be expected to prohibit, combineprevent or materially impede, subdivide, change, exchange, amend hinder or delay the terms ability of or reclassify such Party to satisfy any shares of the Company’s capital stock conditions to, or the consummation of, the Merger or the other equity interests of the Company or any Company SubsidiaryTransactions;
(iii) declare(A) merge or consolidate itself or any of its Subsidiaries with any other Person (expressly excluding, set asidefor the avoidance of doubt, make any of the Other Parent Transactions), or pay any dividend (B) adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other distribution reorganization, in each case, except (whether payable 1) such transactions solely between or among, or solely involving, such Party and one or more of its wholly owned Subsidiaries, or a Subsidiary of such Party and one or more wholly owned Subsidiaries of such Subsidiary, (2) as would not reasonably be expected to result in casha Partnership Material Adverse Effect or Parent Material Adverse Effect, stock as applicable, or property(3) with respect as would not reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of such Party to satisfy any shares of the Company’s capital stock conditions to, or the capital stock consummation of, the Merger or the other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiaryTransactions;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares pledge, dispose of, grant, transfer, encumber or securities convertible authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or exchangeable forencumbrance, or optionsenter into any Contract (including, warrants or rights with respect to acquirethe voting of), any of its partnership interests, limited liability company interests, shares of its capital stock or other equity interests, as applicable (other than the issuance of partnership interests, limited liability company interests, shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary capital stock or among any wholly owned Company Subsidiariesequity interests, sellas applicable, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales by a wholly owned Subsidiary of inventorysuch Party to such Party or one or more of such Party’s wholly owned Subsidiaries, goods or services in the ordinary course by a wholly owned Subsidiary of business in a manner consistent with past practice such Party’s Subsidiary to such Subsidiary or one or more other wholly owned Subsidiaries of obsolete equipment such Subsidiary, or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing in respect of equity-based awards outstanding as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties Agreement in the ordinary course of business in a manner consistent accordance with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Optionstheir terms and, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if documents as in effect on the date of this Agreement), would constitute a Material Contractor securities convertible or exchangeable into or exercisable for any such partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or any options, warrants or other rights of any kind to acquire any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or such convertible or exchangeable securities;
(xiv) change reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its methods partnership interests, limited liability company interests, shares of financial accounting capital stock or accounting practices in equity interests, as applicable, or securities convertible or exchangeable into or exercisable for any material respect other than partnership interests, limited liability company interests, shares of capital stock or equity interests, as required by changes in GAAPapplicable;
(xiivi) make (except for elections made in the ordinary course of business)waive, change release, assign, settle or revoke compromise any material Tax electionclaim, change action or proceeding, including any Tax accounting period state or material method of Tax accountingfederal regulatory proceeding seeking damages or injunction or other equitable relief, amend any material Tax Return if such amendment which waiver, release, assignment, settlement or compromise would reasonably be expected to result in a Partnership Material Adverse Effect or Parent Material Adverse Effect, as applicable;
(vii) other than in the Ordinary Course, make, change or revoke any material Tax liabilityelection (other than a Tax election with respect to Spectra Energy Partners GP, LLC), adopt or change any material Tax accounting method, file any material amended Tax Return, settle or compromise any material liability for Taxes or any Tax claim, audit, claimassessment or dispute for an amount materially in excess of the amount reserved or accrued on such Party’s most recent consolidated balance sheet included in the Parent Reports or Partnership Reports, as applicable, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiiiviii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated material changes with respect to accounting policies, except as required by the capital expenditure budget changes in GAAP (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company Financial Accounting Standards Board or any Company Subsidiary may make any Non-Budgeted Capital Expenditure thatsimilar organization, when added or Law, including pursuant to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000SEC rule or policy;
(xivix) except as expressly required by applicable Legal Requirements make or the Company’s Organizational Documents, convene (A) declare any special meeting of the Company’s shareholders other than the Company Shareholder Meeting dividends or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect distributions to the voting holders of any capital stock Common Units or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other thanParent Common Stock, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protectioneach case, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause Ordinary Course, subject to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied8.10; or
(xxiix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during Notwithstanding anything to the period from the date of this Agreement through the earlier of the Closing or the termination of contrary in this Agreement, except a Party’s obligations under Section 8.1(a) to take an action or not to take an action, or to cause its Subsidiaries to take an action or not to take an action, shall, with respect to any Persons (1and their respective Subsidiaries) controlled by such Party, or in which such Party otherwise has a voting interest, but that are not wholly owned Subsidiaries of such Party or have public equity holders, only apply (i) to the extent permitted by the Company shall otherwise give organizational documents and governance arrangements of such entity and its prior consent in writing (such consent not to be withheld, conditioned or delayed)subsidiaries, (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (Aii) to the extent the Company shall otherwise give a Party is authorized and empowered to bind such entity and its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (subsidiaries and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid permitted by any wholly owned Parent Subsidiary to Parent the Party’s or another wholly owned Parent Subsidiary;
its Subsidiaries’ duties (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture fiduciary or otherwise) (A) to such entity and its subsidiaries or any other Person, (B) any of its equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessholders.
Appears in 1 contract
Sources: Merger Agreement (Enbridge Inc)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) Except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Law or (4) as otherwise expressly required by this Agreement, the Company covenants and agrees that, from and after the date hereof and prior to the Effective Time, except with the prior written consent of Parent, the Company shall, and shall cause the Company its Subsidiaries to, use commercially reasonable efforts to conduct its their business in the ordinary course of business; provided that any action expressly permitted by consistent with past practice and shall, and shall cause its Subsidiaries to, use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates.
(b) Without limiting the remaining provisions of this Section 4.1(a) (including Section 4.1(a) generality of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period foregoing and in furtherance thereof, from the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except as (A) required by applicable Law, (B) otherwise expressly required by this Agreement, except (AC) as set forth in the relevant subsection of Section 6.1(b) of the Company Disclosure Letter, or (D) with the prior written consent of Parent ((X) which consent, solely with respect to the extent Parent shall otherwise give its prior consent items and actions set forth in writing clauses (in the case of subsections (iviii), (vi), (viiiv), (ix), (xxiii), (xiixv), (xiii), xvi) and (xvii) of this Section 4.1(a), shall not be unreasonably withheld, conditioned or delayed so long as the action or omission (or series of related actions or omissions) the subject of such consent clauses would not reasonably be expected to result in (x) the Company being obligated to make payments in excess of $1,000,000 or (y) additional cost, expense or liability to Parent or Merger Sub hereunder in excess of $1,000,000, (Y) which consent, solely with respect to the items and actions set forth in clause (xi), shall not be unreasonably withheld, conditioned or delayed), and (BZ) as set forth in Section 4.1(a) of which consent, with respect to the Company Disclosure Scheduleother following clauses, (C) as may be required by applicable Legal Requirements, given or (D) as expressly required by this Agreementwithheld in Parent’s sole discretion), the Company shall not, and the Company shall cause its Subsidiaries not (and shall not permit any Company Subsidiary to)::
(i) amend the Company’s Organizational Documents amend, supplement or amend the Organizational Documents otherwise change its certificate of any Company Subsidiaryincorporation, bylaws, limited liability company agreement or other applicable governing instruments;
(ii) splitmerge or consolidate with any other Person or restructure, combinereorganize or completely or partially liquidate;
(iii) acquire (by merger, subdivideconsolidation, changeacquisition of stock or assets or otherwise) any corporation, exchangepartnership or other business organization or any material assets from any other Person;
(iv) issue, amend deliver, sell, pledge, dispose of, grant, transfer, encumber, or authorize the terms of issuance, delivery, sale, pledge, disposition, grant, transfer, lease, license, guaranty or reclassify encumbrance of, any shares of the Company’s its capital stock or other equity interests or the capital stock or equity interests of any of its Subsidiaries (other than (A) the issuance of Shares upon the exercise of Company Options or awards under the ESPP or the settlement of Company RSUs, in each case in accordance with the Stock Plans and that are outstanding as of the date hereof or that are issued after the date hereof in compliance with this Agreement or (B) the issuance or transfer of capital stock or equity interests of a wholly owned Subsidiary of the Company or any of its wholly-owned Subsidiaries to the Company or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, stock units, stock awards, warrants or other rights of any kind to acquire any shares of such capital stock, equity interests, convertible or exchangeable securities;
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company) in excess of $250,000 or outside the ordinary course of business consistent with past practice;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than interests (except for cash dividends or distributions only to the extent paid by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) acquire (by mergerreclassify, consolidationsplit, operation combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of law, acquisition of stock, other its capital stock or equity interests or assets, formation securities convertible or exchangeable into or exercisable for any shares of a joint venture its capital stock or otherwise) equity interests (other than (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory acquisition in the ordinary course of business consistent with past practice of any Shares tendered by current or former Service Providers in connection with the cashless exercise of Company Options or in order to pay Taxes in connection with the exercise of Company Options or the vesting of Company RSUs, (B) repurchases of Shares at a price per Share not exceeding the Per Share Merger Consideration to the extent required or permitted pursuant to the terms and conditions of awards granted under the Stock Plans outstanding as of the date hereof, the form of which has been made available to Parent prior to the date hereof or (3C) inbound licenses repurchases of Shares pursuant to the Stock Repurchase Plan in accordance with its terms until the Stock Repurchase Plan is terminated pursuant to Section 6.17.
(viii) incur any Indebtedness for borrowed money or guarantee such Indebtedness of another Person (other than a wholly owned Subsidiary of the Company), or issue or sell any debt securities or warrants or other grants rights to acquire any debt security of the Company or assignments any of Intellectual Property its Subsidiaries, in each case other than in the ordinary course under letters of credit, lines of credit or other credit facilities or arrangements in effect on the date hereof so long as the total Indebtedness incurred under all such letters of credit, lines of credit or credit facilities does not exceed $500,000 in the aggregate;
(ix) make or authorize any capital expenditures in excess of $250,000 individually or $500,000 in the aggregate, other than in accordance with the capital expenditure plan set forth on Section 6.1(b)(ix) of the Company Disclosure Letter in the ordinary course of business;
1 Note (x) make any material changes with respect to W&S: Subject to ongoing review any method of Tax or financial accounting policies or procedures, except as required by the Company.
(v) except changes in connection with any transaction between the Company and any wholly owned Company Subsidiary GAAP or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionsby a Governmental Entity;
(vixi) except in connection with institute, compromise, settle, come to an arrangement regarding or agree to compromise, settle or come to an arrangement regarding any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: claims (A) sales involving amounts in excess of inventory$50,000 individually or $100,000 in the aggregate, goods (B) that would impose any non-monetary obligation on the Company or services its Subsidiaries or Affiliates that would continue after the Effective Time or (C) involving any stockholder, director or director nominee of the Company or that would grant any rights with respect to appointment or nomination of directors;
(xii) make, change or rescind any material Tax election or method of Tax accounting, file any material amended Tax Return, settle or compromise any material Tax liability, consent to or request any extension or waiver of any limitation period with respect to any claim or assessment of a material amount of Taxes (other than pursuant to extensions of time to file Tax Returns in the ordinary course of business consistent with past practices), enter into any closing agreement with respect to any material Tax or surrender any right to claim a material Tax refund, fail to pay any Taxes as they become due and payable;
(xiii) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire, ▇▇▇▇▇ ▇ ▇▇▇▇ on or otherwise dispose of any material assets, properties or rights of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except (A) in a manner the ordinary course of business consistent with past practice (which, in the case of Intellectual Property, shall be limited to only nonexclusive licenses or subscriptions granted to customers in the ordinary course of obsolete equipment business) and (B) pursuant to Contracts in effect on the date of this Agreement to the extent set forth on Section 6.1(b)(xiii) of the Company Disclosure Letter (and made available to Parent prior to the date hereof);
(xiv) except as required under applicable Law or assets the terms of any Benefit Plan in effect as of the date hereof (A) grant, provide or increase (or commit to grant, provide or increase) any severance or termination payments or benefits to any current or former Service Provider; (B) increase in any manner (or commit to increase in any manner) the compensation or benefits of any current or former Service Provider (other than in the ordinary course consistent with past practices in all respects (including as to number of promotions, identity of employees being promoted, timing thereof and amount of increases) for employees with aggregate annual compensation potential (after taking into account such increase) of $200,000 or less who are being promoted to a higher paying position), (C) become a party to, establish, adopt, terminate or amend (or commit to become a party to, establish, adopt, terminate or amend) any Benefit Plan or arrangement that would have been a Benefit Plan if in effect on the date hereof (other than routine changes to welfare plans in the ordinary course consistent with past practice) or accelerate the vesting of, or lapse of restrictions on, any compensation (including any Company Option, Company RSU or Company PSU) for the benefit of any Person; (D) establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former Service Providers or any of their beneficiaries; (E) cause the funding of any rabbi trust or similar arrangement or take any action to fund or in any other way secure the payment of compensation or benefits under any Benefit Plan; or (F) terminate the employment or services of any Service Provider with annual compensation in excess of $200,000 other than for cause, or hire any Service Provider for annual compensation (base salary and incentive opportunities) in excess of $200,000;
(xv) abandon, encumber, convey title (in whole or in part), exclusively license or grant any right or other licenses to material Intellectual Property owned or exclusively licensed to the Company or any of its Subsidiaries, or enter into licenses or agreements that impose material restrictions upon the Company or any of its Subsidiaries with respect to Intellectual Property owned by any third party, in each case other than in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete modify, amend or partial liquidation of the Company or terminate any Company Subsidiary or Material Contract, (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise enter into any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include successor agreement to an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, expiring Material Contract other than in the ordinary course of business in a manner consistent with past practicepractice or that does not change the terms of such expiring Material Contract or (C) enter into any new agreement that would have been considered a Material Contract if it were entered into on or prior to the date hereof;
(xxixvii) take terminate, cancel, materially amend or cause to be taken materially modify any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedInsurance Policies; or
(xxiixviii) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (Sciquest Inc)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing (such approval not to be unreasonably withheld, delayed or conditioned)), and except as otherwise expressly contemplated by this Agreement or required by applicable Laws, the business of it and its Subsidiaries shall be conducted, to the extent contemplated thereby, in a manner consistent with the business plan set forth in Part I to Section 6.1(a) of the Company Disclosure Letter (the “Business Plan”) and, otherwise in the ordinary course of business (taking into account the effects of the Business Plan). To the extent consistent with the foregoing, the Company and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates. Without limiting the generality of the preceding provisions of this Section 6.1(a), and in furtherance thereof, from the date of this Agreement through until the earlier of the Closing or the termination of this AgreementEffective Time, except (1A) to the extent as otherwise specifically contemplated or specifically permitted by provisions of this Agreement other than this Section 6.1(a), (B) as Parent shall otherwise give its prior consent may approve in writing (such consent approval, not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2C) as is required by applicable Law or (D) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shall, will not and shall cause will not permit its Subsidiaries to:
(i) adopt any change in its certificate of formation or bylaws or other applicable governing instruments;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person;
(iii) adopt a plan of complete or partial liquidation, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) dissolution, restructuring, recapitalization or other reorganization of the Company Disclosure Scheduleor any of its Subsidiaries;
(iv) will not constitute make any acquisition of any assets or Person for a violation purchase price in excess of $10 million unless such acquisition would be permissible under clause (xi) below;
(v) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of the foregoing. During the period from the date Company or any of this Agreement through the earlier of the Closing or the termination of this Agreement, except its Subsidiaries (other than (A) to the extent Parent shall otherwise give its prior consent in writing issuance of Shares upon the settlement of performance units, restricted stock awards and other awards under the Stock Plans (in the case of subsections (iv)and dividend equivalents thereon, (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayedif applicable), (B) as set forth in Section 4.1(athe issuance of Shares upon conversion of Convertible Senior Notes, or (C) the issuance of shares by a wholly-owned Subsidiary of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirementsto the Company or another wholly-owned Subsidiary), or (D) as expressly required by this Agreementsecurities convertible or exchangeable into or exercisable for any shares of such capital stock, the Company shall not (and shall not permit or any Company Subsidiary to):
(i) amend the Company’s Organizational Documents options, warrants or amend the Organizational Documents other rights of any Company Subsidiarykind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iivi) splitmake any loans, combine, subdivide, change, exchange, amend the terms of advances or reclassify capital contributions to or investments in any shares of the Company’s capital stock or Person (other equity interests of than the Company or any Company Subsidiarydirect or indirect wholly owned Subsidiary of the Company) in excess of $20 million in the aggregate;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for (A) any other Personregular quarterly dividends paid to holders of Shares in an amount not to exceed $0.4325 per Share per quarter, with record dates of or no earlier than, March 2, 2007; June 1, 2007; September 1, 2007; December 1, 2007; March 1, 2008 and June 1, 2008, respectively, and provided that no quarterly dividend will be declared with respect to the quarter in which the Effective Time occurs unless the Effective Time is after the record date for such quarter, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets dividends paid in the ordinary course of business consistent with past practice; practice by any direct or indirect wholly-owned Subsidiary to the Company or to any other direct or indirect wholly-owned Subsidiary and (C) dividends to holders of shares of preferred stock of TXU US Holdings Company in accordance with the terms of such preferred stock) or enter into any agreement with respect to the voting of its capital stock;
(viii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (other than the acceptance of Convertible Senior Notes surrendered by their holders for conversion and the acquisition of any Shares tendered by current or former employees or directors in order to pay Taxes in connection with the settlement of performance units, restricted stock awards and other awards under the Stock Plans);
(ix) repurchase, redeem, defease, cancel, prepay, forgive, issue, sell, incur or otherwise acquire any indebtedness for borrowed money or any debt securities or rights to acquire debt securities of the Company or any of its Subsidiaries, or assume, guarantee or otherwise become responsible for such indebtedness of another Person (other than a wholly owned Subsidiary of the Company), except for indebtedness for borrowed money incurred or repaid in the ordinary course of business consistent with past practice (A) under the Company’s existing revolving credit facilities or the extension or refinancing thereof, (B) pursuant under commercial paper borrowings, (C) to written Contracts refinance indebtedness for borrowed money as such indebtedness matures and using commercially reasonable efforts to obtain comparable terms and conditions, (D) by drawing under outstanding letters of credit or commitments existing (E) in connection with the remarketing of outstanding Pollution Control Revenue Bonds in each case of any excepted issuance, refinancing or incurrence of indebtedness, which does not include any prepayment penalties, makewhole or similar terms and which does not interfere with, compete with or impede in any material respect the Debt Financing;
(x) amend or modify in any material respect the terms of, or refinance, any indebtedness for borrowed money, guarantee of indebtedness for borrowed money or debt securities of the Company or any of its Subsidiaries, except in connection with any refinancing of such indebtedness as it matures that does not include any new prepayment penalties, make-whole or similar term and does not unreasonably interfere with, compete with or impede in any material respect the Debt Financing;
(xi) except as set forth in the capital expenditures contained in the Business Plan and for expenditures related to operational emergencies, equipment failures or outages, make or authorize any capital expenditure in excess of $50 million in the aggregate during any 12 month period;
(xii) except as required by applicable Law, reactivate or enter into any “reliability must run” Contract with respect to any generating plant that, as of the date of this Agreement; , is shutdown or “mothballed;”
(xiii) make any material changes with respect to accounting policies or procedures, except as required by Law or by changes in GAAP;
(xiv) waive, release or settle any pending or threatened litigation or other proceedings before a Governmental Entity (A) for an amount in excess of $10 million or (B) entailing the incurrence of (1) any obligation or liability of the Company in excess of such amount, including costs or revenue reductions, (2) obligations that would impose any material restrictions on the business or operations of the Company or its Subsidiaries, or (C) as security for that is brought by any borrowings permitted current, former or purported holder of any capital stock or debt securities of the Company or any Subsidiary relating to the transactions contemplated by Section 4.1(a)(viii); or this Agreement;
(Dxv) licenses granted to customers or other third parties than in the ordinary course of business in a manner consistent with past practicepractice or except to the extent required by Law, make or change any material Tax election, settle or compromise any Tax liability of the Company or any of its Subsidiaries in excess of $10 million, change any method of Tax accounting, enter into any closing agreement with respect to any material Tax or surrender any right to claim a material Tax refund;
(viixvi) directly or indirectly repurchase, redeem or otherwise acquire take any shares action outside the ordinary course of business that could result in the Company’s or inclusion in taxable income of any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants intercompany gain of the Company or any of its Subsidiaries;
(xvii) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any assets, product lines or businesses of the Company or its Subsidiaries (including capital stock of any of its Subsidiaries) with a fair market value in excess of $400 million in the aggregate, other than sales of inventory, electricity or other commodities, Derivative Products, real property or obsolete goods or equipment or cancellation of, abandonment of, or allowing to lapse or expire, Intellectual Property in the ordinary course of business consistent with past practice or pursuant to Contracts in effect prior to the exercise of repurchase rights existing date hereof that have been made available to Parent or Merger Sub;
(xviii) except as required pursuant to Contracts or Benefit Plans in effect prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed moneyas otherwise required by applicable Law, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate grant or amend provide any Company Plan except to the extent permitted by clauses (B), (C), (D) severance or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation termination payments or benefits of to any member of the Company Board, current employee, director or former employee of the Company or any Company Subsidiaryof its Subsidiaries or to any Designated Officer, except, in the case of employees who are not Designated Officers, in the ordinary course of business and consistent with past practice, (CB) grant increase the compensation or make any rights to severance, retention, change in control or termination pay new equity awards to any member of the Company Board, current employee director or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at of its Subsidiaries or to the level of Vice President or aboveany Designated Officer, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means case of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date employees who are not Designated Officers of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President , in the ordinary course of business in a manner and consistent with past practice; practice or (4C) increases establish, adopt, terminate or materially amend any Benefit Plan (other than routine changes to welfare plans);
(xix) (A) modify in compensation any material respect the TXU Trading Policies or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e.similar policy, annual base salary or wage rates and target annual cash bonus opportunities) in amounts other than modifications that are in more restrictive to the ordinary course of business in a manner consistent with past practice; Company and its Subsidiaries or (6B) enter into any Derivative Product or any similar transaction, other actions set forth in than as permitted by Section 4.1(a)(ix6.1(a)(xix) of the Company Disclosure ScheduleLetter;
(xxx) except in the ordinary course of businessenter into, (i)(A) amend or terminate (except for terminations pursuant to other than at the expiration end of the existing term of a term), renew or materially extend or amend any Material Contract) any Company Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreementhereof, would constitute be a Company Material Contract;
(xi) change any of its methods of financial accounting ; or accounting practices in waive any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)default under, change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityrelease, settle or compromise any material claim against the Company or liability for Taxes or obligation owing to the Company under any Tax auditCompany Material Contract;
(xxi) fail to maintain in full force and effect material insurance policies covering the Company and its Subsidiaries and their respective properties, claim, assets and businesses in a form and amount consistent with past practice unless the Company determines in its reasonable commercial judgment that the form or other proceeding relating to a material amount of Taxessuch insurance should be modified;
(A) except for any filings or proceedings related to automatic transmission capital trackers or automated meter reading investments, voluntarily file or initiate any proceeding before any Governmental Entity regarding rates charged by any Subsidiary of the Company, (B) enter into any agreement settlement or make any commitment or concession with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from Person (including any Governmental Entity) regarding the regulated rates, surrender regulated rate base or return on equity of any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver Subsidiary of the statute of limitations with respect to a material amount of Taxes;
Company or (xiiiC) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in take those actions referenced on Section 4.1(a)(xiii6.1(a)(xxii) of the Company Disclosure Schedule Letter;
(a “Non-Budgeted Capital Expenditure”)xxiii) sell, except transfer, swap, encumber or otherwise make unavailable to the Company and its Subsidiaries any air emissions allowances, credits or offsets presently available to, possessed or controlled by the Company or its Subsidiaries, or purchase any air emissions allowances, credits or offsets, provided that the foregoing shall not restrict the Company or any Company Subsidiary may make of its Subsidiaries from using any Non-Budgeted Capital Expenditure thatsuch allowances, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements credits or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner offsets consistent with past practice, to offset emissions at any of liabilities reflected their facilities;
(xxiv) enter into any new commodity transactions which are referred to as Category I transactions in (xix) of Section 6.1(a) of the Company Disclosure Letter (“Category I Transactions”), that require the initial or reserved against ongoing posting of letters of credit and/or cash as collateral support, except for any of such Category I Transactions referred to in paragraph 2 of the Most Recent Company Balance Sheetdescription thereof that will have a scheduled duration of 36 months or less (“Exempt Category I Transactions”);
(xxv) revoke, withdraw, terminate or abandon any currently outstanding or pending Environmental Permits or applications therefor relating to (A) the construction of generation facilities; or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve operation of the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part business of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementSubsidiaries, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments actions that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; or
(3xxvi) inbound licenses agree, authorize or commit to do any of the foregoing.
(b) After the date hereof and on or prior to the Closing Date, to the extent that the Company or any of its Subsidiaries enters into any transactions defined as Category I Transactions (other than Exempt Category I Transactions, such non-exempt transactions being referred to as, “Post-Signing Commodity Hedging Arrangements”) and is required to provide Liens, security interests or other grants collateral to support their respective obligations under such Post-Signing Commodity Hedging Arrangements, the Company shall cause the documentation relating to such Post-Signing Commodity Hedging Arrangements to provide for, on the Closing Date, automatic termination, amendment and/or other release of such Liens, security interests and other collateral and the replacement of such collateral support obligations with Liens on the Collateral (as defined in Exhibit B to the Debt Financing Commitment) that would be pari passu with the Liens granted to secure the Borrower Obligations, the Guarantees and other Hedging Arrangements (each as described and as defined in Exhibit B to the Debt Financing Commitment). In addition, the Company shall cause the Post-Signing Commodity Hedging Arrangements not to include any limitations on the Company or assignments its Subsidiaries to incur indebtedness or grant Liens on its assets.
(c) Except for actions required under the terms of Intellectual Property this Agreement, neither party hereto shall intentionally take or permit any of its Affiliates to take any action that is reasonably likely to prevent or delay in any material respect the ordinary course consummation of businessthe Merger.
(d) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
(e) The Company covenants and agrees that it will use its reasonable best efforts to enter into the commercial transactions referenced in Section 6.1(e) of the Company Disclosure Letter on the terms and conditions described therein.
Appears in 1 contract
Sources: Merger Agreement (Txu Corp /Tx/)
Interim Operations. 1
(a) The Company agrees thatshall, during the period and shall cause each of its Subsidiaries to, from and after the date of this Agreement through until the earlier of the Closing or Effective Time and the termination of this AgreementAgreement in accordance with Article IX (the “Interim Period”), except (1) to the extent as Parent shall otherwise give its prior consent approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), (2) as otherwise expressly contemplated or required by this Agreement, (3) as required by applicable Law, (4) as set forth in Section 4.1(a7.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Letter or (45) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use for commercially reasonable actions as reasonably required to comply with or implement COVID-19 Measures, conduct its business in the Ordinary Course of Business and use and cause each of its Subsidiaries to use their respective reasonable best efforts to conduct its business in accordance with applicable Law and maintain its and its Subsidiaries’ business and assets and relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees, agents and business associates. Without limiting the ordinary course generality of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) and in furtherance of the Company Disclosure Scheduleforegoing sentence, during the Interim Period, except (I) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing as otherwise expressly contemplated or the termination of required by this Agreement, except (AII) to the extent Parent shall otherwise give its prior consent as required by applicable Law, (III) as approved in writing by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned or delayed, except that Parent may withhold, condition or delay approval of actions contemplated by Section 7.1(a)(iii) or Section 7.1(a)(iv) in Parent’s sole discretion), (BIV) as set forth in Section 4.1(a7.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, Letter or (DV) as expressly for commercially reasonable actions in deviation of the prohibitions set forth in clauses (xii) (Material Contracts) (other than with respect to the Contracts described in the proviso thereto) or (xvii) (Compensation) below to the extent reasonably required by this Agreementto comply with or implement COVID-19 Measures, the Company shall not (and shall cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend adopt or publicly propose any change in the Company’s Organizational Documents (other than to correct scrivener’s errors or amend the Organizational Documents of any Company Subsidiaryimmaterial or ministerial amendments);
(ii) split(A) merge or consolidate the Company or any of its Subsidiaries with any other Person, combineexcept for any such transactions among Wholly Owned Subsidiaries, subdivideor (B) solely with respect to the Company and its Wholly Owned Subsidiaries, changerestructure, exchangereorganize, amend recapitalize or completely or partially liquidate or dissolve (provided, that the terms of Company may effect or reclassify any shares of cause to be effected the actions referred to in this clause (ii) to the extent they involve only the Company’s capital Wholly Owned Subsidiaries and are reasonably required to be undertaken to effectuate transactions otherwise permitted under clauses (iii) or (iv) below);
(iii) acquire, directly or indirectly, by merger, consolidation, acquisition of stock or assets or otherwise, any business, Person or assets from any other equity interests Person with a fair market value or purchase price in excess of $30,000,000 in any individual transaction or series of related transactions or $75,000,000 in the aggregate, in each case, including any amounts or value reasonably expected to be paid in connection with a future earn-out, purchase price adjustment, release of “holdback” or similar contingent payment obligation (it being understood and agreed that this Section 7.1(a)(iii) shall not alter or limit the applicability of Section 7.6(f) to the Company in any respect);
(iv) transfer, sell, lease to a third Person, divest, abandon, allow to expire, license to a third Person, outsource to a third Person or otherwise dispose of, or grant any Encumbrance (other than any Permitted Encumbrance) upon, any properties or assets (tangible or intangible, including any Intellectual Property Rights), product lines or businesses of the Company or any Company Subsidiaryof its Subsidiaries, including capital stock of any of its Subsidiaries, except (A) other than with respect to Intellectual Property Rights and outsourcing, in connection with services provided in the Ordinary Course of Business, (B) expiration, abandonment or sales of obsolete or unused assets in the Ordinary Course of Business, (C) sales, leases, licenses, outsourcing or other dispositions of assets with a fair market value not in excess of $10,000,000 individually or $25,000,000 in the aggregate, (D) with respect to licenses of Intellectual Property Rights, non-exclusive grants of licenses in the Ordinary Course of Business and (E) the grant of Encumbrances to secure Indebtedness permitted by Section 7.1(a)(ix);
(iiiv) issue, sell, pledge, dispose of, grant, transfer, lease to a third Person, license to a third Person, guarantee, encumber or enter into any Contract or other agreement, understanding or arrangement (whether oral or written) with respect to the voting of, any shares of capital stock of the Company (including, for the avoidance of doubt, Shares) or of any of its Subsidiaries, securities convertible or exchangeable into or exercisable for any such shares of capital stock, or any options, warrants or other rights of any kind to acquire any such shares of capital stock or such convertible or exchangeable securities (other than (A) proxies or voting agreements solicited by or on behalf of the Company in order to obtain the Requisite Company Vote and any other votes or consents contemplated by Section 7.4(f) or in connection with any annual meeting of the Company’s stockholders) or (B) issuances (1) by a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company, (2) solely with respect to shares of capital stock of the Company’s Non-Wholly Owned Subsidiaries, in connection with joint ventures, minority investments, venture capital investments or similar transactions permitted by Section 7.1(a)(iii) or Section 7.1(a)(vi), (3) in respect of Company Equity Awards and issuances under the Stock Plans in the Ordinary Course of Business or (4) pursuant to the ESPP in accordance with its terms and subject to Section 4.2(g));
(vi) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than (A) to or from the Company and any of its Wholly Owned Subsidiaries or (B) for indemnification or advancements to any directors, officers or other fiduciaries of the Company or any of its Subsidiaries pursuant to any of their respective Organizational Documents or any Contracts with such Persons, in either case in effect as of the date of this Agreement) outside the Ordinary Course of Business in excess of $10,000,000 individually or $40,000,000 in the aggregate;
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of its capital stock (including with respect to the Company’s capital stock or , for the capital stock or other equity interest avoidance of any Company Subsidiarydoubt, other than Shares), except for cash dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryto any other Subsidiary of the Company;
(ivviii) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note solely with respect to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company its material Subsidiaries, issuereclassify, sellsplit, grant combine, subdivide or redeem, purchase or otherwise permit acquire or offer to become outstanding redeem, purchase or otherwise acquire, directly or indirectly, any additional shares of, of its capital stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock (including, for the avoidance of doubt, Shares) (provided, that the Company may effect or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionscause to be effected the actions referred to in this clause (viii) to the extent they involve only the Company’s Wholly Owned Subsidiaries and are reasonably required to be undertaken to effectuate transactions otherwise permitted under clauses (iii) or (iv) above);
(viix) assume, guarantee, issue or incur any Indebtedness (including the issuance of any debt securities or any warrants or other rights to acquire any debt security) or enter into any hedging agreements, except for (subject, in connection each case, to Section 7.1(a)(xii)) (A)
(1) Indebtedness of the type contemplated by clauses (a) and (b) of the definition thereof in the Ordinary Course of Business up to $75,000,000 and (2) other Indebtedness in the Ordinary Course of Business up to $25,000,000, (B) drawdowns under the Credit Agreement, (C) guarantees of Indebtedness of its Wholly Owned Subsidiaries otherwise incurred in compliance with any transaction this Section 7.1(a), (D) Indebtedness between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property Wholly Owned Subsidiaries or tangible assets, except for between one Wholly Owned Subsidiary of the Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets and another Wholly Owned Subsidiary of the Company, other than: (AE) sales of inventory, goods or services hedging agreements entered into in the ordinary course Ordinary Course of business in a manner consistent with past practice Business and not for speculative purposes, (F) extensions or renewals of obsolete equipment or assets any outstanding Indebtedness in the ordinary course Ordinary Course of business consistent with past practiceBusiness or (G) refinancings or replacements of any outstanding Indebtedness on terms that are substantially similar to the terms of such outstanding Indebtedness or are otherwise more favorable to the Company and its Subsidiaries; provided, that any Indebtedness assumed, guaranteed, issued or incurred by the Company or any of its Subsidiaries or for which the Company or any of its Subsidiaries otherwise becomes liable under this Section 7.1(a)(ix) shall permit prepayment at any time without penalty of any kind;
(Bx) pursuant make or authorize any payment of, or accrual or commitment for, capital expenditures, except in the Ordinary Course of Business;
(xi) enter into any Contract that would have been a Material Contract had it been entered into prior to written Contracts or commitments existing as of the date of this Agreement; , other than Contracts entered into in the Ordinary Course of Business;
(xii) other than in the Ordinary Course of Business, (A) terminate or fail to renew any Material Contract (other than expirations of any such Contract in accordance with its terms), (B) amend, modify, supplement or waive, or assign, convey, Encumber or otherwise transfer in whole or in part, rights or interests pursuant to or in, any Material Contract (other than assignments between or among the Company or any of its Wholly- Owned Subsidiaries that would not be adverse to Parent), or (C) as security for enter into any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in Contract that would have been a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) Material Contract had it been entered into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of provided, however, that in no event may the Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms take any of the applicable award;
foregoing actions with respect to (viii1) incur the Specified Tax Agreements and any Tax “hold harmless,” sharing, allocation or indemnification agreement or arrangement (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptthan, in each case, for: (1x) amendments to Company Plans determined by such agreements or arrangements solely between or among the Company and any of its Wholly Owned Subsidiaries, (y) such agreements or arrangements contained in good faith to be required to comply commercial contracts entered into, amended or terminated in the Ordinary Course of Business the principal subject of which is not Taxes and (z) customary Tax indemnification or Tax benefit provisions contained in merger agreements, stock purchase agreements, asset purchase agreements or other business combination agreements entered into in accordance with applicable Legal Requirements; Section 7.1(a)), (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Credit Agreement, andthe Senior Notes Indenture (including, for the avoidance of doubt, by entering into a supplemental indenture pursuant thereto), the Senior Amortizing Notes Indenture (including, for the avoidance of doubt, by entering into a supplemental indenture pursuant thereto) and the Purchase Contract Agreement (in each case, except in connection with extensions or renewals permitted under Section 7.1(a)(ix)(F) or refinancings or replacements permitted under Section 7.1(a)(ix)(G)) (provided, that, notwithstanding anything to the contrary herein, in this Section 4.1(a)(ixno event may the Company or any of its Subsidiaries amend, modify or supplement the Credit Agreement such that the borrowing capacity thereunder is increased beyond such capacity as of the date hereof), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment Contract described in accordance with clause (iv) or (xv) of the Company’s present hiring plan made available to Parent definition of a “Material Contract”, or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions Contract set forth in Section 4.1(a)(ix7.1(a)(xii) of the Company Disclosure ScheduleLetter; provided, further, that this Section 7.1(a)(xii) shall not be construed to permit any action that would otherwise require the consent of Parent pursuant to any other provision of Section 7.1(a);
(xxiii) except cancel, modify or waive any debts or claims held by or owed to the Company or any of its Subsidiaries having in each case a value in excess of $5,000,000 individually or $20,000,000 in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contractaggregate;
(xixiv) change any of its methods of financial accounting or accounting practices in any material respect other than as required with respect to Transaction Litigation, any Proceeding in connection with, arising out of or otherwise related to a demand for appraisal under Section 262 of the DGCL or any Tax claim, audit, assessment or dispute, which shall be governed by changes in GAAP;
(xiiSections 7.15, 4.3(f) make (except for elections made in the ordinary course of businessand 7.1(a)(xvi), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityrespectively, settle or compromise any material liability Proceeding for Taxes or any Tax audit, claim, or other proceeding relating to a material an amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability $20,000,000 individually or fault on $40,000,000 in the part of the Company or aggregate during any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancelcalendar year, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorizeprevent, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests consummation of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid transactions contemplated by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Personthis Agreement, (B) impose any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division material restriction on the operations of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessits material Subsidiaries or
Appears in 1 contract
Sources: Merger Agreement
Interim Operations. 1
(a) The Company covenants and agrees that, during the period from after the date of hereof and prior to the Effective Time, except as contemplated by this Agreement through or required by applicable Laws or with the earlier prior written approval of the Closing Parent or the termination of this Agreement, except Merger Sub (1) to the extent Parent which shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to (i) conduct its business in the ordinary course consistent with past practice and (ii) use its commercially reasonable efforts to keep available the services of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) current officers, key employees and consultants of the Company Disclosure Schedule) will not constitute a violation and each of its Subsidiaries and to preserve business organizations of the foregoingCompany and each of its Subsidiaries intact and to maintain existing relations and goodwill with customers, suppliers and other Persons with whom the Company or any of its Subsidiaries has material business relations. During the period from From the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except (w) as otherwise expressly contemplated by this Agreement, except (Ax) with the prior written approval of Parent or Merger Sub (which, solely with respect to the extent Parent shall otherwise give its prior consent matters in writing (in the case of subsections (iv), (vi), (viii), clauses (ix), (x), (xiixi), (xiiixv), and (xvi), (xvii) and (xviii) below and, to the extent relating to any of this Section 4.1(a)the foregoing clauses, such consent clause (xxi) below, shall not to be unreasonably withheld, conditioned delayed or delayedconditioned), (By) as required by applicable Law or any Governmental Entity or (z) as set forth in Section 4.1(a5.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall will not (and shall will not permit any Company Subsidiary of its Subsidiaries to):, directly or indirectly:
(i) amend the Company’s Organizational Documents adopt any amendment to or amend the Organizational Documents other change in its certificate of any Company Subsidiaryincorporation or bylaws or other applicable governing instruments;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person;
(iii) make any acquisition (whether by merger, combineconsolidation, subdivideor acquisition of stock or assets) of any interest in any Person or any division thereof or any assets thereof, changeexcept (A) any such acquisitions that are in the ordinary course of business consistent with past practice and are for consideration not in the aggregate in excess of $500,000 in any transaction or series of related transactions, exchange(B) pursuant to Contracts in effect as of the date of this Agreement, amend true and complete copies of which have been made available to Parent or (C) as permitted by clause (ix) of this Section 5.1(a);
(iv) issue, deliver, sell, pledge, grant, transfer, encumber or otherwise dispose of, or authorize, propose or agree to the terms of issuance, delivery, sale, pledge, grant, transfer, encumbrance or reclassify disposition of, any shares of the Company’s capital stock or other equity interests Equity Interests of the Company or any of its Subsidiaries, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock or other Equity Interests of the Company Subsidiaryor any of its Subsidiaries (other than the issuance of Shares upon the settlement of Company Options existing on the date hereof on the terms in effect on the date hereof or by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company);
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company) in excess of $250,000 in the aggregate, other than amounts paid in connection with employee relocation consistent with the Company’s past practices;
(vi) declare, set aside, establish a record date for, make or pay any dividend or other distribution (whether payable in cash, stock stock, property or propertyotherwise) with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Company domestic Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by mergeror offer to acquire, consolidationdirectly or indirectly, operation any of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses its capital stock or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, Equity Interests or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, Equity Interests (other than shares the acquisition of any Shares tendered by current or former employees or directors in order to pay Taxes in connection with the settlement of Company Common Stock issuable upon Options outstanding as of the date hereof under the Option Plans and other than in connection with a customary cashless exercise of Company Options outstanding as of the date hereof under the Option Plans, in each case, in accordance with the terms of such Company OptionsOptions in effect on the date hereof);
(viviii) except in connection with redeem, repurchase, prepay, defease, cancel, incur or otherwise acquire any transaction between indebtedness (including capital lease obligations and off-balance sheet financings), or enter into any Contract to do any of the foregoing or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property Subsidiaries or tangible assetsassume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person (other than the Company or any of its Subsidiaries) for borrowed money, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (Ax) sales of inventory, goods or services capital lease obligations incurred in the ordinary course of business in a manner consistent with past practice practices so long as the aggregate obligations of the Company and its Subsidiaries under all capital leases (including all capital leases outstanding as of the date of this Agreement) do not exceed $12,000,000 or (y) indebtedness for borrowed money incurred in the ordinary course of obsolete equipment business consistent with past practices under the revolving credit facility under the Credit Agreement as in effect on the date hereof in an aggregate amount at any time outstanding not to exceed the maximum amount authorized under such facility;
(ix) except as set forth in the capital budgets set forth in Section 5.1(a)(ix) of the Company Disclosure Schedule or assets expenditures related to operational emergencies, make or authorize any capital expenditures that individually, or in the aggregate, exceed $500,000;
(x) settle, release, waive or compromise any pending or threatened Action (A) requiring payments by the Company or any of its Subsidiaries of an amount in excess of $250,000, except as required under the terms of applicable insurance policies where the liability of the Company or any of its Subsidiaries in respect thereof does not exceed, in the aggregate, the portion of the applicable deductible under such insurance policy required to be paid by the Company or its Subsidiaries, (B) entailing the incurrence of any liability or obligation of the Company or its Subsidiaries in excess of such amount, including costs or revenue reductions or obligations that would impose any material restrictions on the business or operations of the Company or any of its Subsidiaries or (C) that is brought by any current, former or purported holder of any capital stock or other Equity Interests or debt securities of the Company or any of its Subsidiaries relating to the transactions contemplated by this Agreement;
(xi) transfer, sell, lease, license, mortgage, pledge, surrender, abandon or allow to lapse or expire or otherwise dispose of or grant any Lien other than any Permitted Lien on any material amount of assets, rights, properties, product lines or businesses of the Company or its Subsidiaries, other than in the ordinary course of business, pursuant to Contracts as in force on the date of this Agreement or transactions solely among the Company and/or its wholly-owned Subsidiaries;
(xii) except (x) to the extent required by applicable Law or (y) to satisfy contractual obligations existing on the date hereof pursuant to written Contracts or Plans that have been disclosed and made available to Parent, (A) pay or commit to pay any severance or termination pay, (B) enter into or amend any employment Contract or any deferred compensation, consulting, severance, retention, retirement or other similar Contract, (C) increase or commit to increase any employee benefits payable to any director, officer or employee of the Company or any of its Subsidiaries, including wages, salaries, compensation, pension, severance, termination pay or other benefits or payments (except in the case of employees other than officers and directors in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) adopt or make any commitment to adopt any additional employee benefit plan, (E) of this Section 4.1(a)(ix), (B) increasemake any contribution to any Plan, or accelerate the vesting (F) amend or payment ofextend or make any commitments to amend or extend any Plan in any material respect;
(xiii) adopt or enter into a plan or agreement of complete or partial liquidation or dissolution, the compensation merger, consolidation, restructuring, recapitalization or benefits of any member of the Company Board, current employee, or former employee other reorganization of the Company or any Company Subsidiary, of its Subsidiaries (Cother than the Merger);
(xiv) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee communicate with employees of the Company or any of its Subsidiaries regarding the compensation, benefits or other treatment that they will receive in connection with the Merger, unless any such communications are consistent with the terms of this Agreement or, to the extent the subject matter thereof is not addressed herein, prior directives or documentation provided to the Company Subsidiaryby Parent (in which case, the Company shall provide Parent with prior notice of and the opportunity to review and comment upon any such communications);
(Dxv) hire pay, discharge, settle or promote satisfy any employee at material claim that involves the payment by or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any of its Subsidiaries of amounts in excess of $250,000 or imposes equitable relief on the Company Subsidiary whose annual base salary exceeds $100,000 (or any of its Subsidiaries, other than for cause); except, in each case, for: (1A) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means performance of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment contractual obligations in accordance with the Company’s present hiring plan made available to Parent their terms, (B) payment, discharge, settlement or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except satisfaction in the ordinary course of business, and (i)(AC) payment, discharge, settlement or satisfaction in accordance with their terms, of claims, liabilities or obligations that have been (x) disclosed in the most recent financial statements of the Company included in the Company Reports filed prior to the date hereof to the extent of such disclosure or (y) incurred since the date of such financial statements in the ordinary course of business;
(xvi) except as may be required by GAAP or as a result of a change in Law, make any material change in accounting principles, policies, practices, procedures or methods;
(xvii) except (A) in the ordinary course of business consistent with past practices or (B) as would not result in the incurrence of a material amount of additional Tax, make or change any Tax election, change any annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any of its Subsidiaries, surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax;
(xviii) enter into, terminate (other than extensions at the end of a term in the ordinary course of business) or materially amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) modify any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreementhereof, would constitute have been a Material Contract;
(xixix) change any of its methods of financial accounting or accounting practices fail to maintain in any full force and effect material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by insurance policies covering the Company and the Company its Subsidiaries since the date of this Agreement would notand their respective properties, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business assets and businesses in a manner consistent with past practiceform, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverageif any, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxixx) take implement any plant closing or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent mass layoff that could implicate the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedWARN Act; or
(xxiixxi) authorizeagree, approve authorize or commit to do any of the foregoing or enter into any letter of intent (binding or non-binding) or similar agreement or make any commitment arrangement with respect to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of Nothing contained in this Agreement through is intended to give Parent or Merger Sub, directly or indirectly, the earlier right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations.
(c) The Company shall promptly (but in any event within seven (7) days after receipt of such notice by the Closing Company or the termination any of this Agreementits Subsidiaries) inform Parent in writing of any written or, except (1) to the extent the Company shall otherwise give has Knowledge thereof, other notice received by the Company or any of its prior consent in writing (such consent not Subsidiaries after the date hereof from any other party to any Material Contract required to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b3.15(b) of the Parent Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Schedule indicating that such third party intends to terminate or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts not to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for renew any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessMaterial Contract.
Appears in 1 contract
Sources: Merger Agreement (BWAY Holding CO)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through hereof and until the earlier of the Closing or the termination of this Agreement, except Agreement pursuant to its terms or the Effective Time (1) to the extent Parent unless Buyer shall otherwise give its prior consent in writing (approve, such consent approval not to be unreasonably withheld, conditioned or delayedwithheld if the request relates to any matters other than those described in clauses (i), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iviii), (vi), (viii), (ixiv), (x), (xiixi), or (xv) below), except as otherwise expressly contemplated by this Agreement and except as required by applicable Laws, the business of the Company and its Subsidiaries shall be conducted in the ordinary course consistent with past practices and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, material customers, suppliers, distributors, key employees and business associates and keep available the services of its and its Subsidiaries’ present key employees, to maintain all of its material operating assets in their current condition (normal wear and tear excepted) and to maintain and preserve its business organization and its material rights and franchises. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, except (1) as otherwise expressly required by this Agreement, (2) upon at least twenty-four hours prior written notice delivered to Buyer (if feasible), as may be required by applicable Laws (including the rules of NASDAQ), (xiii), and (xvii3) of this Section 4.1(a)as Buyer may approve, such consent approval not to be unreasonably withheld, conditioned or delayedwithheld if the request relates to any matters other than those matters described in clauses (i), (Biii), (iv), (x), (xi), or (xv) below, or (4) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementLetter, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents adopt a plan of complete or amend the Organizational Documents partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of any Company Subsidiarysuch entity;
(ii) split, combine, subdivide, change, exchange, amend the terms enter into any new line of or reclassify any shares of the Company’s capital stock or business outside its existing business segments (other equity interests of the Company or any Company Subsidiarythan as permitted by clause (vi));
(iii) (A) amend its articles of incorporation, by-laws or other applicable governing instruments; (B) split, combine, subdivide or reclassify its outstanding shares of capital stock; (C) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or propertyproperty in respect of any capital stock; (D) with respect to enter into, amend or modify any shareholder rights agreement, rights plan, “poison pill” or other similar agreement or instrument; or (E) repurchase, redeem or otherwise acquire any shares of the Company’s its capital stock or the any securities convertible into or exchangeable or exercisable for any shares of its capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only (except pursuant to the extent paid forfeiture of Company Options, Company Restricted Shares or Common Stock Units or the acquisition by any wholly owned Company Subsidiary to the Company of Company Shares in settlement of the exercise price of a Company Option or another wholly owned Tax withholding obligations of holders of Company SubsidiaryOptions, Company Restricted Shares or Common Stock Units);
(iv) merge or consolidate itself or any of its Subsidiaries with, acquire all or substantially all of the assets of, or acquire all or a substantial portion of any equity or voting interests of any other Person, except for any such transactions among its wholly-owned Subsidiaries, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations or businesses (other than as permitted by clause (vi));
(v) form any Subsidiary of the Company or any of its Subsidiaries;
(vi) acquire any business, whether by merger, consolidation, operation purchase of lawproperty or assets or otherwise (valuing any non-cash consideration at its fair market value as of the date of the agreement for such acquisition); provided that neither the Company nor any of its Subsidiaries shall make any acquisition that would, acquisition of stockor would reasonably be expected to prevent, other equity interests delay or assetsimpair the Company’s ability to consummate the transactions contemplated by this Agreement;
(vii) incur, formation of a joint venture prepay, repurchase, assume or otherwise) (A) materially modify any other Person, (B) indebtedness for borrowed money or guarantee any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any of its debt securities or of any of its Subsidiaries, except for (DA) any material assets except, indebtedness for borrowed money (1x) interest rate swaps on customary commercial terms consistent with past practice and in compliance with its risk management policies in effect on the date of this Agreement or relating to acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipmentCompany, supplies and inventory collectively in an amount not to exceed $10,000,000 in the ordinary course of business aggregate, or (3y) inbound in replacement of existing indebtedness for borrowed money, or (B) guarantees incurred in compliance with this Section 6.1 by it of indebtedness of its wholly-owned Subsidiaries;
(viii) make or commit to any capital expenditures materially in excess of the aggregate amount reflected in the Company’s capital expenditure budget for the period in which such capital expenditures are made;
(ix) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any of its material assets, Intellectual Property, product lines or businesses or of its Subsidiaries, including capital stock of any of its Subsidiaries, other than pursuant to Contracts in effect as of the date of this Agreement or sales or licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(vx) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant pledge, dispose of, grant, transfer, encumber, or otherwise permit authorize or agree to become outstanding the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any additional shares ofof capital stock, or any other equity or voting interest of the Company or of any its Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary to it or another of its wholly-owned Subsidiaries), or securities convertible or exchangeable forinto or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire, acquire any shares of its such capital stock stock, or other equity interestssuch convertible or exchangeable securities, other than shares of Company Common Stock issuable upon in connection with the exercise of outstanding the Top-Up Option or any Company OptionsOptions issued as of the date hereof;
(vixi) make any change with respect to accounting policies or procedures, except as required by changes in GAAP or by Law;
(xii) except as required by Law, (A) make, revoke or change any material Tax election or take any material position on any material Tax Return filed on or after the date of this Agreement or adopt any material method therefor that is inconsistent with elections made, positions taken or methods used in connection with preparing or filing similar Tax Returns in prior periods or (B) settle or resolve any transaction between material Tax controversy;
(xiii) make any material loans, advances or capital contributions to or investments in any Person (other than the Company and or any direct or indirect wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company);
(xiv) enter into any non-competition Contract or other Contract that limits in any material respect either the type of business in which the Company or its Subsidiaries (or, other thanafter the Effective Time, Buyer or its Affiliates) may engage or the manner or locations in which any of them may so engage in any business;
(xv) except as required pursuant to Contracts in effect as of the date of this Agreement, or as otherwise required by this Agreement or applicable Law: (A) sales grant or provide any severance or termination payments or benefits to any of inventoryits directors, goods officers or services employees; (B) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards, except as provided in Section 6.1(a)(x) above, to any of its directors, officers or employees (other than increases in compensation in connections with new-hires and promotions, compensation adjustments in the ordinary course of business consistent with the normal annual review cycle of the Company and payment of bonuses in a manner the ordinary course of business and consistent with past practice practices); provided however, the Company may establish a cash retention program comprised of up to $375,000 in aggregate payments to employees of the Company who remain employed by the Company for at least 12 months following the Closing Date, provided that such amount will increase by $250,000 to a total of $625,000 in aggregate payments if the Offer Closing has not occurred within 90 days from the date hereof, and thereafter Buyer will reasonably consider an additional increase to such amount as reasonably requested by the Company; (C) establish, adopt, amend or terminate any Company Compensation and Benefit Plan or amend the terms of any outstanding equity-based awards; (D) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Compensation and Benefit Plans, to the extent not already provided in any such Company Compensation and Benefit Plan; (E) change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Compensation and Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; or (F) forgive any loans to any of its or of obsolete equipment any of its Subsidiaries’ directors, officers or assets employees;
(xvi) adopt or enter into any collective bargaining agreement, works council agreement, or other labor union Contract applicable to the employees of the Company or any of its Subsidiaries;
(xvii) take any action or omit to take any action that would reasonably be expected to result in any of the conditions of the Offer set forth on Exhibit A or to the Merger set forth in Article VII not being satisfied or intended to prevent, delay or materially impair the ability of the Company to consummate or otherwise impede, interfere or be inconsistent with the Offer, the Merger or any transactions contemplated thereby;
(xviii) settle any litigation in any forum or any dispute, or any administrative or other proceedings before or threatened to be brought before a Governmental Entity, including but not limited to any claims of shareholders and any shareholder litigation relating to this Agreement or any transaction contemplated by this Agreement or otherwise, other than settlements solely for monetary compensation and/or the provision of services and/or products by the Company with an aggregate value of less than $500,000;
(xix) disclose any confidential or proprietary information of the Company or any of its Subsidiaries other than pursuant to a confidentiality agreement restricting the right of the recipient thereof to use and disclose such confidential or proprietary information;
(xx) fail to keep in force any material insurance policy or replacement or revised provisions providing insurance coverage with respect to the assets, operations and activities of the Company and its Subsidiaries as are currently in effect;
(xxi) except in the ordinary course of business consistent with past practice; , (BA) pursuant to written Contracts enter into any Contract that would constitute a Material Contract, or commitments existing as of the date of this Agreement; or modify, amend (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course case of business modifications or amendments, in a manner consistent with past practice;
(vii) directly or indirectly repurchasethat is, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity intereststaken as a whole, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant adverse in to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (DSubsidiaries) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract , or (B) waive, release or assign any material rights or claims under any Material ContractsContract;
(xxii) convene any annual or special meeting (or any adjournment thereof) of the shareholders of the Company other than the Shareholders Meeting (if such a meeting is required by this Agreement and applicable Law); or
(xxiii) agree, authorize or commit to do any of the foregoing.
(iib) enter into any Contract or agreement that, if in effect on Within ten days of the end of each month after the date of this Agreement, would constitute a Material Contract;
the Company covenants and agrees to provide Buyer with written notice of (xii) change any of its methods of financial accounting indebtedness for borrowed money incurred, prepaid, repurchased, assumed, materially modified or accounting practices guaranteed in compliance with Section 6.1(a)(vii) during the prior month, (ii) any action taken under Section 6.1(a)(xii) during the prior month because required by Law, (iii) any material respect other than as loans, advances or capital contributions to or investments in the Company or any Subsidiary permitted by Section 6.1(a)(xiii) during the prior month, (iv) any action taken during the prior month permitted under Section 6.1(a)(xv) because it was required by changes Contracts in GAAP;
effect as of the date of the Agreement or Law, (xiiv) make any increases in compensation during the prior month permitted under Section 6.1(a)(xv)(B), (except for elections made vi) the name and title of any employee receiving a retention payment during the prior month permitted under Section 6.1(a)(xv)(B) and the amount of such payment, (vii) any settlement of litigation during the prior month permitted under Section 6.1(a)(xviii), (viii) any action taken during the prior month which is permitted under Section 6.1(a)(xxi) because it was in the ordinary course of business)business and (ix) all new employees hired and promotions during the prior month.
(c) Buyer covenants and agrees as to itself and its Subsidiaries that, change after the date hereof and until the earlier of the termination of this Agreement pursuant to its terms or revoke any material Tax electionthe Effective Time, change any Tax accounting period except (i) as otherwise expressly required by this Agreement, (ii) as the Company may approve, such approval not to be unreasonably withheld, conditioned or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claimdelayed, or other proceeding relating (iii) pursuant to its obligations under a material amount Contract in effect as of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would notAgreement, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements Buyer will not and will not permit Merger Sub or the Companyany of Buyer’s Organizational Documents, convene (A) or Merger Sub’s Subsidiaries to take any special meeting of the Company’s shareholders other than the Company Shareholder Meeting action or (B) omit to take any other meeting of the Company’s shareholders to consider a proposal action that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Offer set forth on Exhibit A or to the Merger set forth in ARTICLE V Article VII not being satisfied; or
(xxii) authorizesatisfied or otherwise would reasonably be expected to prevent, approve delay or enter into any agreement impair Buyer’s or make any commitment Merger Sub’s ability to take any of consummate the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees thatOffer, during the period from the date of this Agreement through the earlier of the Closing Merger or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required other transactions contemplated by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of Except as otherwise (w) required by this Agreement, except (1x) to the extent Parent shall otherwise give its prior consent required by applicable Law, (y) approved in writing by Parent (such consent approval not to be unreasonably withheld, conditioned delayed or delayed), conditioned) or (2z) as set forth in on Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirementsafter the date of this Agreement and prior to the Effective Time, or (4) as expressly required by this Agreementthe Company will, and will cause its Subsidiaries to, use its and their reasonable best efforts to conduct their businesses in the ordinary course and, to the extent consistent therewith, the Company shall, and shall cause the Company its Subsidiaries to, use its and their commercially reasonable efforts to conduct preserve their business organizations intact (including the service of key employees) and maintain existing relations with key customers, suppliers and other Persons with whom the Company and its Subsidiaries have significant business in the ordinary course of businessrelationships; provided provided, however, that any no action expressly permitted by the remaining provisions Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 6.1(b) shall be deemed a breach of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not sentence unless such action would constitute a violation breach of the foregoing. During the period from the date such other provision of this Agreement through the earlier of the Closing or the termination of Section 6.1(b).
(b) Except as otherwise (w) required by this Agreement, except (Ax) to the extent Parent shall otherwise give its prior consent required by applicable Law, (y) approved in writing by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned delayed or delayed), conditioned) or (Bz) as set forth in on Section 4.1(a6.1(b) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by from the date of this AgreementAgreement until the Effective Time, the Company shall will not, and will cause its Subsidiaries not (and shall not permit any Company Subsidiary to)::
(i) amend (x) adopt any change in the certificate of incorporation or bylaws of the Company’s Organizational Documents , or amend (y) adopt any change in the Organizational Documents comparable organizational document of any Subsidiary of the Company Subsidiarythat, in the case of this clause (y), would adversely affect the consummation of the Merger or the other transactions contemplated by this Agreement;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate the Company or any of its Subsidiaries, changein each case other than any such transactions among any wholly-owned Subsidiaries of the Company which would not reasonably be expected to result in a restriction or reduction in any participation exemption available under non-U.S. Law with respect to any such Subsidiaries;
(A) acquire or license tangible or intangible assets outside of the ordinary course of business or (B) make any capital contributions to or investments in any Person, exchangein the case of clauses (A) and (B), amend other than any such transactions (I) among the terms Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries or (II) for amounts that do not exceed $200,000,000 in the aggregate in any fiscal year of the Company (in the case of clause (A), determined based upon the greater of the fair market value of the assets so acquired by the Company and its Subsidiaries or reclassify the fair market value of the consideration paid by the Company and its Subsidiaries);
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, restricted shares, restricted share units, performance share units, stock appreciation rights, phantom stock or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, in each case, other than (A) any such transaction among the Company Subsidiaryand its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries or (B) any issuance, sale, grant or transfer of Shares pursuant to the settlement of Company Options, Company SARs, Company RSUs, Company PSUs or Company Awards outstanding as of the date of this Agreement or granted after the date of this Agreement not in violation of this Agreement;
(iiiv) make any loans, advances or guarantees outside the ordinary course of business, other than any such transactions (I) among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, (II) permitted under Section 6.1(b)(viii) or (III) not in excess of $25,000,000 in the aggregate in any fiscal year of the Company;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock (except for (A) dividends or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly wholly-owned Subsidiary of the Company Subsidiary to the Company or another wholly to any other wholly-owned Subsidiary of the Company Subsidiaryand except for any quarterly dividends to stockholders of the Company by the Company in an amount not to exceed $0.54 per Share, in each case declared and paid at such times and in such amounts as is consistent with historical practice over the most recent fiscal year ended prior to the date of this Agreement and (B) dividend equivalents paid in respect of Company RSUs, Company PSUs or Company Awards outstanding as of the date of this Agreement or granted thereafter in accordance with the terms of this Agreement, in each case, in accordance with their terms);
(ivvii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for (A) any other Personsuch transaction by a wholly-owned Subsidiary of the Company and (B) acquisitions of Shares in satisfaction of withholding obligations or payment of the exercise price in respect of Company Options, Company SARs, Company RSUs, Company PSUs or Company Awards outstanding as of the date of this Agreement pursuant to its terms or granted thereafter not in violation of this Agreement);
(viii) incur any Indebtedness, except for (A) intercompany Indebtedness among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, (B) Indebtedness not to exceed $1,500,000,000 in aggregate principal amount incurred to replace, renew, extend, refinance or refund any equity interest in any other Person existing Indebtedness of the Company, which Indebtedness is (I) prepayable without premium or penalty (other than investments customary LIBOR breakage amounts) or (II) on terms that (x) taken as a whole, are substantially consistent with or not more restrictive than those contained in equity securities that constitute short term investments that are accounted the Indebtedness being replaced, renewed, extended, refinanced or refunded and (y) permit parent guarantees and parent company reporting to be substituted for as cash equivalents)Company reporting, (C) Indebtedness under commercial paper arrangements, revolving credit facilities and other working capital or liquidity facilities not to exceed $3,500,000,000 in aggregate principal amount at any business or division of another Persontime outstanding pursuant to this subclause (C), or (D) guarantees of Indebtedness of the Company or its wholly-owned Subsidiaries outstanding on the date hereof or otherwise incurred in compliance with this Section 6.1(b), (E) Indebtedness of the Subsidiaries of the Company organized under the laws of a country other than the United States in an aggregate principal amount (for all such Subsidiaries, taken together) not to exceed $500,000,000 at any material assets excepttime outstanding pursuant to this subclause (E), (F) Indebtedness pursuant to receivables financing or factoring arrangements (but in any event for which the factoring balance does not exceed $2,400,000,000 at any time outstanding (it being understood that this clause (viii)(F) and clause (xv)(D), taken together, permit a factoring balance that does not exceed $2,400,000,000)), (G) Indebtedness pursuant to capitalized leases (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory entered into in the ordinary course of business or (32) inbound licenses or entered into in connection with the Arizona Greenhouse project, (H) Indebtedness in respect of swaps, options, derivatives and other grants or assignments of Intellectual Property hedging Contracts entered into in the ordinary course of business, (I) Indebtedness under letters of credit, bank guarantee arrangements and any related reimbursement obligations entered into in the ordinary course of business or (J) Indebtedness not to exceed $250,000,000 in aggregate principal amount that may be incurred other than in accordance with subclauses (A) through (I) inclusive;
1 Note (A) make or authorize any payment of, or accrual or commitment for, capital expenditures that, in the aggregate, exceed by more than 5%, or (B) fail to W&S: Subject make payments of capital expenditures that, in the aggregate, are no less than 90%, in the case of each of clauses (A) and (B), of the aggregate amounts set forth in Section 6.1(b)(ix) of the Company Disclosure Schedule (the “Capex Budget”) for the respective periods set forth therein, except with respect to ongoing review acquisitions or licenses of tangible or intangible assets permitted by the Company.clause (II) of Section 6.1(b)(iii);
(vx) except other than in the ordinary course of business or in connection with any transaction between matter to the extent such matter is expressly permitted by any other clause of this Section 6.1(b), (A) enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement or (B) terminate or waive, or materially amend, modify or supplement, any rights or interests pursuant to or in any Material Contract, other than expirations of any such Contract in accordance with the terms of such Contract;
(xi) enter into any Contract that (x) materially restricts the ability of the Company or any of its Subsidiaries (or, following the consummation of the Merger, would materially restrict the ability of the Surviving Corporation or its Affiliates) to compete in any business or geographic area, or (y) grants “most favored nation” status that, following the consummation of the Merger, would be material to the Company or the crop science business of Parent and would apply to Parent, the Company or any wholly owned of their respective Subsidiaries;
(xii) make any material changes with respect to financial accounting policies or procedures, except as required by Law, proposed Law or by U.S. GAAP or statutory or regulatory accounting rules or interpretations with respect thereto or by any Governmental Entity or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization);
(xiii) settle any action, suit, claim, hearing, arbitration, investigation or other proceedings (other than any audit or other proceeding in respect of Taxes), in each case made or pending against the Company Subsidiary or among any wholly owned of its Subsidiaries (and not including any settlement with respect to matters in which any of them is a plaintiff) for an amount in excess of $150,000,000 in the aggregate in any fiscal year of the Company or on a basis that would result in the imposition of any writ, judgment, decree, settlement, award, injunction or similar order of any Governmental Entity that, in the aggregate, would materially restrict the future activity or conduct of Parent, the Company or any of their respective Subsidiaries, issueother than with respect to monetary settlements only, settlements or compromises of any action, suit, claim, hearing, arbitration, investigation or other proceedings to the extent reflected or reserved against in the balance sheet (or the notes thereto) of the Company included in the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2016 for an amount not in excess of the amount so reflected or reserved;
(A) file or amend any material Tax Return (other than in the ordinary course of business), (B) settle or compromise any material Tax liability for an amount materially in excess of the amount reserved or accrued on the Company’s most recent consolidated balance sheet included in the Company Reports, (C) make, change or revoke any material Tax election (other than an entity classification election under Treasury Regulation Section 301.7701-3 in respect of any Subsidiary that is not material), (D) change any material method of Tax accounting or (E) terminate, consent to the termination of or agree to any material modification of any ruling or agreement listed in Section 5.1(n)(iii) of the Company Disclosure Schedule (or that would be necessary to be listed therein in order to prevent a breach of Section 5.1(n)(iii)) if such action is reasonably expected to result in a material increase in the Tax liability of the Company or any of its Subsidiaries;
(xv) transfer, sell, grant or otherwise permit to become outstanding any additional shares oflease, or securities convertible or exchangeable fordivest, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, cancel or otherwise dispose of any assets (by mergerother than Intellectual Property Rights, consolidationGermplasm, operation of law, division or otherwise), any material Company IP or material tangible assets Biological Materials) of the CompanyCompany or any of its Subsidiaries, except for transfers, sales, leases, divestments, cancellations or other than: dispositions (A) sales of inventory, goods or products and services in the ordinary course of business in a manner consistent with past practice or business, (B) of obsolete inventory and equipment in the ordinary course of business, (C) of tangible assets having a net present value not in excess of $35,000,000 individually or $60,000,000 in the aggregate in any fiscal year of the Company (it being understood that the net present value of such assets shall count against the thresholds set forth in Section 6.1(b)(xvi)(IV)), (D) of receivables, invoices and related rights and assets pursuant to receivables financing or factoring arrangements (but in any event for which the factoring balance does not exceed $2,400,000,000 at any time outstanding (it being understood that this clause (xv)(D) and clause (viii)(F), taken together, permit a factoring balance that does not exceed $2,400,000,000)) and (E) among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries;
(xvi) (A) transfer, sell, license, mortgage, pledge, encumber, divest or otherwise dispose of any Intellectual Property Rights, Germplasm or Biological Materials or (B) except in the ordinary course of business, grant, extend, amend, fail to diligently prosecute or cancel, abandon or allow to lapse (in each case, except as required in the diligent prosecution of Registered Intellectual Property), waive or modify, as applicable, any rights in or to material Owned Intellectual Property, Germplasm or Biological Materials, except, in the case of each of clauses (A) and (B), for (I) non-exclusive licenses of Intellectual Property Rights, Germplasm or Biological Materials in the ordinary course of business, (II) exclusive licenses of Intellectual Property Rights, Germplasm or Biological Materials in the ordinary course of business, provided such licenses are not exclusive in all fields of use, and provided, further, that such licenses retain the Company’s rights to offer or develop products or services that the Company is offering or developing or planning to offer or develop, as the case may be, at any time from the date hereof and through the Effective Time, (III) transfers, sales, licenses, mortgages, pledges, encumbrances, divestments and other dispositions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries and (IV) transfers, sales, licenses, divestments or other dispositions of Intellectual Property Rights, Germplasm or Biological Materials having a net present value not in excess of $35,000,000 individually or $60,000,000 in the aggregate in any fiscal year of the Company (it being understood that the net present value of such Intellectual Property Rights, Germplasm or Biological Materials shall count against the thresholds set forth in Section 6.1(b)(xv)(C));
(xvii) except as required by Contracts or Benefit Plans, (A) terminate, adopt, establish, enter into, materially amend or renew (or communicate any intention to take such action) any material Benefit Plan, (B) increase in any manner the compensation, benefits, severance or termination pay of any of the current or former directors, officers, employees or consultants who are natural persons of the Company or its Subsidiaries, other than routine annual salary or base pay increases (and corresponding increases in bonus or incentive payments to the extent determined by reference to salary or base pay) for non-executive officer employees, in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or , (C) as security for pay any borrowings permitted by Section 4.1(a)(viii); bonus or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchaseincentive compensation under any Benefit Plan, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws payments based on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness actual performance for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C)completed performance periods, (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting of or payment oflapsing of restrictions, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) splitvesting requirements, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesswith
Appears in 1 contract
Sources: Merger Agreement
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through the earlier of and until the Closing or the earlier termination of this AgreementAgreement in accordance with its terms, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2w) as set forth in Section 4.1(a5.1(a) of the Company Disclosure ScheduleSchedules, (3x) as may otherwise expressly contemplated or required by this Agreement (including compliance with Section 5.21), (y) as consented to in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned) or (z) as required by applicable Legal RequirementsLaw, Order, a Governmental Entity or (4) by any Company Plan in effect as expressly required by of the date of this Agreement, Seller shall cause the Company to, and the Company shall, and Seller and the Company shall cause the Company Company’s Subsidiaries to, use commercially reasonable efforts to (1) conduct its business their respective businesses in the ordinary course of business; provided business consistent with past practice (it being understood that any action expressly permitted compliance by the remaining provisions Company or its applicable Subsidiary with the terms of this a Company Material Contract listed in Section 4.1(a) (including Section 4.1(a2.17(a) of the Company Disclosure Schedule) will Schedules and made available to Buyer prior to the date hereof shall not constitute a violation failure to comply with the obligations set forth in this clause (1)) and (2) use reasonable best efforts to preserve intact the present business organizations and lines of businesses of the Company and its Subsidiaries in all material respects and maintain material relationships with suppliers, distributors and customers and others having material business dealings with the Company and its Subsidiaries. Notwithstanding the generality of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) and subject to the extent Parent shall otherwise give its prior consent immediately preceding sentence (including the exceptions set forth in writing clauses (in the case of subsections (iv), (vi), (viii), (ixw), (x), (xii), (xiii), y) and (xviiz) of this Section 4.1(athereof), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall cause its Subsidiaries not permit any Company Subsidiary to):
(i) amend their respective Governing Documents as in effect on the Company’s Organizational Documents or amend the Organizational Documents date of any Company Subsidiarythis Agreement;
(ii) splitacquire any Equity Interests in, combineor assets, subdividerights or properties of, change, exchange, amend the terms of any business or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution division (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture consolidation or otherwise) (A) any other Person, (B) any equity interest in from any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)acquisitions of assets, properties or rights (CA) from any business or division Subsidiary of another Person, the Company or (DB) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and its Subsidiaries consistent with past practice, but in each case excluding any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares acquisition of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company OptionsEquity Interests);
(viiii) except in connection merge or consolidate with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third partyother Person, or incur any Lien on any of its material tangible property restructure, reorganize or tangible assets, except for Company Permitted Encumbrances, completely or otherwise dispose of partially liquidate (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of other than the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or disposition of obsolete equipment or worn out assets in the ordinary course of business consistent with past practice; );
(Biv) pursuant issue, sell, pledge, dispose of or encumber any of their respective Equity Interests (or rights or options with respect to written Contracts Equity Interests), except for issuances or commitments existing as dispositions of any capital stock of any of the date Company’s Subsidiaries solely to the Company or any other of this Agreement; its Subsidiaries;
(v) split, combine, subdivide or reclassify any of their respective Equity Interests;
(Cvi) as security for sell, assign, transfer, dispose of or encumber any borrowings permitted by Section 4.1(a)(viii); assets, rights or properties (Dincluding Intellectual Property) licenses granted to customers with a fair market value in excess of $5,000,000 individually or other third parties $10,000,000 in the aggregate, except in connection with sales of inventory or the disposition of obsolete or worn out assets in the ordinary course of business in a manner consistent with past practice;
(vii) directly cancel, fail to renew, fail to continue to prosecute, fail to protect or indirectly repurchasedefend, redeem abandon or otherwise acquire allow to lapse any shares registered or applied-for Company IP, other than any of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: foregoing actions that is both (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business consistent with past practice and (B) concerns Company IP determined by the Company in its reasonable judgment to no longer be material to the Company or any of its Subsidiaries;
(viii) permit any Leakage other than (A) Permitted Leakage or (B) Leakage in an aggregate amount not to exceed $9,000,000 and which, in the case of this clause (B), is taken into account as a manner reduction in Purchase Price at Closing;
(ix) incur any Indebtedness (including any borrowings under existing revolving credit facilities of the Company or any of its Subsidiaries) in excess of $5,000,000 individually or $10,000,000 in the aggregate (other than any accounts payables and accounts receivables solely between the Company and/or one of its Subsidiaries incurred in the ordinary course of business and consistent with past practice; ) or cancel, release, assign, retire, settle or modify any Indebtedness existing between or among any of the Company and its Subsidiaries (4other than cancellations, releases, assignments, retirements, settlements or modifications made in the ordinary course of business and consistent with past practice of any accounts payables and accounts receivables solely between the Company and/or one of its Subsidiaries incurred in the ordinary course of business and consistent with past practice), provided, that it is agreed that accounts payables and accounts receivables do not include loans or advances of funds;
(x) subject any of their respective material properties or assets (including material Intellectual Property) to any Lien, in each case other than Permitted Liens;
(xi) (A) increase or announce any increase in the compensation or benefits payable or to become payable to any Company Employee or any Company Independent Contractor (other than (i) increases in annual base salaries, wage rates, annual bonus targets or service or consulting fees made in the ordinary course of business consistent with past practice, which such increases, in the case of any Restricted Employee, shall not in the aggregate be more than a de minimis amount in the context of such Restricted Employee’s compensation as of the date hereof, or (ii) increases in benefits with respect to Company Employees that are not Restricted Employees that are made in the ordinary course of business consistent with past practice and do not increase costs or obligations of the Company or any of its Subsidiaries by more than a de minimis amount or respect), (B) accelerate the time of vesting, funding or payment of any compensation or benefits required pursuant to any Company Employee or Company Independent Contractor, (C) make any long-term incentive awards (whether settled in cash, equity or other property) to any Company Employee or Company Independent Contractor, (D) grant any new or additional entitlement to or pay any severance or termination pay to any Company Employee or Company Independent Contractor (other than payment of severance or termination pay in the ordinary course of business consistent with past practice that is (i) subject to the applicable recipient executing and not revoking a general release and waiver of claims in favor of the Company and its Subsidiaries and (ii) paid to any Company Employee who is not a Restricted Employee or any Company Independent Contractor) or, (E) grant to any Company Employee or Company Independent Contractor any right to a retention or transaction bonus (other than any such amount which, together with the employer portion of Taxes thereon, is treated as a Transaction Expense and which is included in the Closing Statement and reduces the Closing Purchase Price hereunder at the Closing) or (F) grant to any Company Employee or Company Independent Contractor any right to reimbursement, indemnification or payment for any Taxes, including any Taxes incurred under Section 409A or 4999 of the Code;
(xii) establish, adopt, enter into, materially amend or terminate any Company Plan or any plan, program, policy, agreement or other arrangement that would be a Company Plan if it were in effect on existence as of the date hereofof this Agreement (other than to replace or amend any Company Plan or any plan, program, policy, agreement or other arrangement that would be a Company Plan if it were in existence as of the date of this Agreement if the cost to the Company or its Subsidiaries thereunder is not materially increased); provided, that the Company and its Subsidiaries may enter into or amend (5A) increases to total target cash opportunities employment arrangements with Company Employees who are not and do not become Restricted Employees and (i.e.B) consulting arrangements with Company Independent Contractors or individual healthcare providers, annual base salary in the case of each of clauses (A) and (B), in connection with promotions and new hires or wage rates engagements, so long as such employment and target annual cash bonus opportunities) in amounts that consulting arrangements, and such promotions, new hires and engagements, are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of provided, further, that the Company Disclosure Schedule;
or its applicable Subsidiary may establish and administer the annual bonus plan for the fiscal year ended December 31, 2020 as long as such plan (xincluding in respect of its terms) except is adopted in the ordinary course of business, business consistent with past practice (i)(A) amend or terminate (except for terminations pursuant it being understood that such plan shall not incorporate the terms of any amendment to the expiration of annual bonus plan in effect for the existing term fiscal year ended December 31, 2018);
(xiii) (A) terminate the employment of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on Company Employee who is a Restricted Employee as of the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect Agreement other than as required by changes for misconduct or other acts constituting “cause” or due to expiration or non-renewal of a Contract (other than, in GAAP;
(xii) make (except for elections made the case of a Restricted Employee who is not a Senior Restricted Employee, any termination that is in the ordinary course of businessbusiness consistent with past practice) or (B) hire any employee or promote any employee to any position that would result in such employee being a Restricted Employee (other than any such hiring or promotion to any position that would result in such employee being a Restricted Employee who is not a Senior Restricted Employee that is in the ordinary course of business and consistent with past practice);
(xiv) (A) make, change change, or revoke rescind any material Tax election, change (B) agree with any Taxing Authority to any material adjustment of any Tax accounting period or attribute, (C) file any material method of amended Tax accountingReturn, amend (D) enter into any closing agreement with respect to any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of TaxesTax refund, or, other than in the ordinary course of business, (E) agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
, (xiiiF) settle any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit, or controversy with a Taxing Authority relating to Taxes, (G) change in any material respect any method of accounting used for Tax purposes, or (H) take any action with the intention to or purpose of (i) accelerating the use of any material amount of loss, credit or other than consignment tax asset in a period prior to the Closing or (ii) deferring the recognition of Company Products in the ordinary course any material amount of businessincome, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company gain or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added other Tax Liability to all other Non-Budgeted Capital Expenditures made by a period after the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebyClosing;
(xv) enter into except as required by GAAP, make any agreementmaterial changes to accounting, understanding methods, practices, policies or arrangement with respect to the voting of any capital stock or other equity interests principles of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersits Subsidiaries;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice, (1) enter into any Contract that would have been a Company Material Contract had it been entered into prior to the date of this Agreement or (2) terminate, amend, accelerate, cancel, modify or waive any rights under any Company Material Contract in a manner materially adverse to the Company and its Subsidiaries, excluding any termination upon expiration in accordance with the terms of such Company Material Contract; provided in each case that the Company and its Subsidiaries shall be permitted to extend, renew or replace any Company Material Contract with one or more Contracts on substantially similar terms and consistent with past practice in all material respects;
(xvii) except for the capital expenditures contemplated by the Company capital expenditures budget set forth in Section 5.1(a)(xvii) of the Disclosure Schedules, make, enter into any Contract providing for, or authorize any capital expenditure in excess of $5,000,000 individually or $20,000,000 in the aggregate;
(xviii) compromise, settle or agree to settle any Actions, or investigations (A) involving amounts paid or payable by the Company or its Subsidiaries in excess of $500,000 individually or $5,000,000 in the aggregate, or (B) that would impose any material non-monetary restrictions on the business of the Company or its Subsidiaries that would continue after the Closing;
(xix) make any change to its publicly-facing privacy policies or the operation or security of its material IT Assets, in each case, in any manner that is materially adverse to the business of the Company and its Subsidiaries;
(xx) cancel, release or assign any material Indebtedness owed by any Person to the Company or its Subsidiaries or any material claims held by the Company or any of its Subsidiaries against any such Person;
(xxi) take enter into any Contract with Seller or cause to be taken any action, Affiliate of Seller (other than the Company or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; orits Subsidiaries);
(xxii) authorize, approve or enter into a new line of business or abandon or discontinue any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course existing line of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreementin each case, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets which is material to the Company and the Company its Subsidiaries, taken as a whole, except or, in each casethe case of entry into any new line of business, could reasonably be expected to have any of the effects described in clauses (i), (1ii) acquisitions or (iii) in Section 5.2(d)(iv);
(xxiii) create any Subsidiary of the Company or any of its Subsidiaries;
(xxiv) commute, terminate or let lapse any Company Insurance Policy (unless such policy is not a Specified Insurance Policy and is replaced by Parent from a substantially comparable policy) or amend, cancel, modify or waive any wholly owned Parent Subsidiary rights under any Specified Insurance Policy;
(xxv) (A) sell, assign or among otherwise transfer (except to a Subsidiary) or (B) grant a license (except to a Subsidiary), release, immunity or covenant not to ▇▇▇ under or in respect of, or otherwise encumber, any wholly owned Parent Subsidiaries; material Company IP (2) other than the purchase grant of equipment, supplies and inventory non-exclusive licenses to customers in the ordinary course of businessbusiness consistent with past practice, to the extent such licenses are necessary for the respective customer’s use or receipt of Company Products and subject to terms and conditions (including as to confidentiality) that are consistent with past practice); or
(3xxvi) inbound licenses agree, resolve, authorize or other grants commit to do any of the foregoing.
(b) Nothing contained in this Agreement is intended to give Buyer, directly or assignments indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Closing. Prior to the Closing, the Company shall exercise, consistent with the terms and conditions of Intellectual Property in the ordinary course of businessthis Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
Appears in 1 contract
Sources: Stock Purchase Agreement (3m Co)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing Except (i) as required or the termination of expressly contemplated by this Agreement, except (1ii) to the extent Parent shall otherwise give its prior consent as required by applicable Law, (iii) as approved in writing by Parent (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2iv) as set forth in on Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4v) as expressly required by to the extent necessary to comply with the express obligations set forth in any Material Contract in effect on the date of this Agreement, from the date of this Agreement until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company will, and will cause its Subsidiaries to, use its and their commercially reasonable efforts to conduct their businesses in the ordinary course of business and, to the extent consistent therewith, the Company shall, and shall cause the Company its Subsidiaries to, use its and their commercially reasonable efforts to conduct its preserve their business in the ordinary course of businessorganizations intact and to maintain existing significant business relationships; provided that any no action expressly permitted by the remaining provisions Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 6.1(b) shall be deemed a breach of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not sentence unless such action would constitute a violation breach of the foregoing. During the period from the date such provision of this Agreement through the earlier of the Closing Section 6.1(b).
(b) Except as required or the termination of expressly contemplated by this Agreement, except (Av) to the extent Parent shall otherwise give its prior consent as required by applicable Law, (w) as approved in writing by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (Bx) as set forth in on Section 4.1(a6.1(b) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (Dy) as expressly required by to the extent necessary to comply with the express obligations set forth in any Material Contract in effect on the date of this Agreement, from the date of this Agreement until earlier to occur of the termination of this Agreement pursuant to Article VIII and the Effective Time, the Company shall will not, and will cause its Subsidiaries not (and shall not permit any Company Subsidiary to)::
(i) (x) amend or adopt any change in the certificate of incorporation or bylaws of the Company or (y) amend or adopt any change in the comparable organizational document of any of the Company’s Organizational Documents Subsidiaries that, in the case of this clause (y), would be adverse to Parent, the Company or amend the Organizational Documents of any Company such Subsidiary;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineexcept for any such transaction between or among any of its wholly owned Subsidiaries that would not impose, subdivideindividually or in the aggregate, changeany changes or restrictions on its assets, exchangeoperations or business or on the assets, amend the terms of or reclassify any shares operations and business of the Company’s capital stock Company and its Subsidiaries that would be adverse to Parent or other equity interests any of its Subsidiaries, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreement or arrangement imposing material changes or restrictions on the assets, operations or business of the Company or any of its Subsidiaries except for any such transactions among the Company Subsidiaryand its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries or that does not incur, increase or accelerate any material liability to any Person;
(iii) issue, grant, sell, pledge, dispose of or encumber, or authorize the issuance, grant, sale, pledge, disposition or encumbrance of, any shares of capital stock of the Company or any of its Subsidiaries, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, restricted shares, restricted share units, performance share units, stock appreciation rights, phantom stock or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, in each case, other than (A) any such transaction among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) any issuance, sale, grant or transfer of Shares pursuant to exercise or settlement of Company Equity Awards or Company Warrants outstanding as of the date of this Agreement in accordance with their terms in effect on the date hereof and that were made available to Parent or Company Equity Awards granted after the date of this Agreement not in violation of this Agreement in accordance with their terms, and (C) incurrence of any Permitted Liens;
(iv) make any loans, advances or capital contributions to any Person in excess of $50,000 individually or $150,000 in the aggregate (other than (A) to the Company or any of its wholly owned Subsidiaries, and (B) operating leases and extensions of credit terms to customers in each case in the ordinary course of business consistent with past practice);
(v) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise with respect to any shares of the Company’s its capital stock or the capital stock stock, except for dividends or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Subsidiary of the Company Subsidiary to the Company or another to any other wholly owned Company SubsidiarySubsidiary of the Company;
(ivvi) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for (A) any other Personsuch transaction by a wholly owned Subsidiary of the Company and (B) acquisitions of Shares in satisfaction of withholding obligations in respect of Company Equity Awards), or payment of the exercise price in respect of Company Options, in each case, outstanding as of the date of this Agreement pursuant to its terms or granted thereafter not in violation of this Agreement;
(vii) create, incur, assume or guarantee any Indebtedness for borrowed money, letters of credit or guarantees of the same, except for (A) borrowings under the Company Credit Agreement (as in effect as of the date hereof or as amended, restated, modified, supplemented or refinanced in accordance with this Agreement), (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)letters of credit, (C) any business guarantees or division of another Person, or (D) any material assets except, (1) acquisitions credit support provided by the Company from or any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property its Subsidiaries in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
, (vC) except in connection with any transaction between Indebtedness among the Company and any wholly owned Company Subsidiary its Subsidiaries or among any wholly owned Company the Company’s Subsidiaries, issue, sell, grant or otherwise permit to become outstanding and (D) any additional shares of, Indebtedness for borrowed money in an amount not to exceed $100,000 in the aggregate at any time incurred by the Company or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, Subsidiaries other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionsin accordance with the foregoing clauses (A) through (C);
(viviii) except incur or commit to any capital expenditure or expenditures other than in connection accordance with any transaction between the Company’s capital expenditure budget set forth on Section 6.1(b)(viii) of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of Disclosure Schedule;
(by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, ix) other than: (A) sales of inventory, goods or services than in the ordinary course of business business, in connection with any matter to the extent such matter is permitted by any other clause of this Section 6.1(b) or in connection with any Tax Sharing Agreement (which shall be solely governed by clause (xvii)), (A) enter into any Contract that would have been a Material Contract had it been entered into prior to the date of this Agreement or (B) amend or terminate any Material Contract, the Company Warrant Agreement or the Commercial Warrant Agreements in a manner consistent adverse to the Company (other than expirations of any such Material Contract in accordance with past practice its terms) or otherwise waive, release or assign any material rights, claims or benefits of obsolete equipment the Company or any of its Subsidiaries under any Material Contract, the Company Warrant Agreement or the Commercial Warrant Agreements;
(x) make any changes with respect to financial accounting policies or procedures (other than immaterial changes in the ordinary course of business), except as required by Law or by U.S. GAAP or policy, rules or interpretations with respect thereto by any Governmental Authority or quasi-Governmental Authority with jurisdiction over the Company or its Subsidiaries;
(xi) settle or offer to settle any Action, other than any Tax claim, notice, audit, investigation, assessment or other proceeding with respect to Taxes (which shall be governed by clause (xvii)), (i) for an amount in excess of $250,000 individually or $1 million in the aggregate, other than any settlement or compromise where the amount paid or to be paid by the Company or any of its Subsidiaries is fully covered and paid by insurance coverage maintained by the Company or any of its Subsidiaries, (ii) listed on Section 6.1(b)(xi) of the Company Disclosure Schedule or (iii) that would restrict the operations of the business of the Company and its Subsidiaries after the Effective Time;
(xii) sell, lease, exclusively license, encumber (other than Permitted Liens) or otherwise dispose of any material assets or property except (A) pursuant to existing contracts or commitments made available to Parent, (B) transactions among the Company and its Subsidiaries or among the Company’s Subsidiaries, or (C) in the ordinary course of business consistent with past practicepractice and in no event in an amount exceeding $250,000 individually or $1 million in the aggregate;
(xiii) except as required by Benefit Plans as in effect on the date of this Agreement that are set forth in Section 5.1(i) of the Company Disclosure Schedule: (A) increase the amount or accelerate the vesting, payment or funding of the compensation or other benefits payable or provided to the Company’s or any of its Subsidiaries’ current or former officers, directors, individual service providers or employees, other than increases in compensation or benefits in the ordinary course of business with respect to employees at the level of Vice President or below (such increases not to exceed three percent (3%) of any such employee’s base compensation); (B) pursuant to written Contracts grant or commitments existing as enter into any cash or equity or equity-based incentive, bonus, employment, change of control, severance or retention agreement with any current or former officer, director, individual service provider or employee of the Company or any of its Subsidiaries; (C) establish, adopt, enter into or amend any collective bargaining agreement, Benefit Plan or arrangement that would be a Benefit Plan if in effect on the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual of its Subsidiaries having a base salary exceeds of $100,000 250,000 or more;
(other than xiv) negotiate or enter into any Labor Agreement or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representatives for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) employees of the Company Disclosure Scheduleor any of its Subsidiaries;
(xxv) implement or announce any action that would trigger notice requirements pursuant to the WARN Act;
(xvi) acquire any capital stock in, or any business line or all or a material portion of the assets constituting any business, corporation, partnership, association, joint venture, or other entity or other business organization in any transaction that involves consideration valued in excess of $100,000, individually or $500,000 in the aggregate, including by merger, consolidation, purchase of stock or assets or otherwise, except for (A) transactions solely between the Company and a wholly owned Company Subsidiary or solely between wholly owned Company Subsidiaries or (B) acquisitions of assets or inventory in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xiiA) make (except for elections made in the ordinary course of business)a manner inconsistent with past practice, change or revoke any material Tax election, (B) change any annual Tax accounting period or material method of Tax accounting, amend (C) file any material amendment with respect to any material Tax Return if such amendment (other than amendments that would not reasonably be expected to result in a material increase to the Tax liabilityliability of the Company, the Subsidiaries of the Company or Parent or its Affiliates) or (D) settle or compromise any material liability for Taxes or any Tax claim, notice, audit, claiminvestigation, assessment or other proceeding relating to a material for an amount in excess of Taxes, $250,000 individually or $1 million in the aggregate or (E) enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liabilitySharing Agreement (it being agreed and understood that none of clauses (i) through (xvi) nor clauses (xviii) through (xix) of this Section 6.1(b) shall apply to any action to the extent such action would be taken into account solely for Tax purposes and not for corporate or other applicable Law purposes);
(xviii) license, request escrow, or otherwise grant any Tax ruling from rights to, any Governmental Entitymaterial Owned Source Code or disclose any material trade secrets owned or processed by the Company or any of its Subsidiaries (except to customers or service providers of, surrender any right to claim a material refund of Taxesor Persons with professional, orbusiness or commercial relationships with, other than the Company or its Subsidiaries in the ordinary course of businessbusiness subject to confidentiality obligations); or
(xix) agree, agree authorize or commit to an extension or waiver do any of the statute of limitations with respect to a material amount of Taxes;foregoing.
(xiiic) other than consignment Subject to the terms of Company Products in the ordinary course of businessthis Agreement, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in including Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)6.5 and Section 6.13, except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since after the date of this Agreement would notand prior to the Effective Time, in none of Parent, Merger Sub, the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements Rollover Stockholders or the Company’s Organizational Documents, convene (A) Equity Investors shall take or permit any special meeting of the Company’s shareholders other than the Company Shareholder Meeting their respective Subsidiaries to enter into or (B) agree to enter into any other meeting of the Company’s shareholders to consider a proposal agreement that would reasonably be expected to impairprevent, prevent materially impair or materially delay the consummation of the transactions contemplated hereby;Merger or the satisfaction of any of the closing conditions thereto.
(xvd) Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company and its Subsidiaries prior to the Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
(e) From the date of this Agreement until the Effective Time, none of Parent, Merger Sub, the Rollover Stockholders or the Equity Investors shall, directly or indirectly (i) acquire or agree to acquire by merging or consolidating with, or by purchasing a material portion of the assets of or equity in, any Person (a “Specified Acquisition”) or enter into any agreementnew line of business, understanding if the entering into of a definitive agreement relating to or arrangement with respect to the voting consummation of any capital stock such a Specified Acquisition or other equity interests the entering into of the Company (including any voting trust)such new line of business, other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolutionas applicable, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent prevent, materially delay or materially impede the obtaining of, or adversely affect in any material respect the ability of Parent or Merger from qualifying as a reorganization within Sub to procure, any authorizations, consents, Orders, declarations or approvals of any Governmental Authority or the meaning expiration or termination of Section 368(a) of any applicable waiting period necessary to consummate the Code transactions contemplated by this Agreement, including the Merger, or (B) result in materially increase the risk of any Governmental Authority entering an Order, ruling, judgment or injunction prohibiting the consummation of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required transactions contemplated by this Agreement, including the Merger; or (ii) take any action that is intended to or would reasonably be expected to adversely affect or delay the ability of Parent shall, or Merger Sub to otherwise perform their respective covenants and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of agreements under this Agreement through or to consummate the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required transactions contemplated by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of including the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessMerger.
Appears in 1 contract
Sources: Merger Agreement (Sharecare, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) Except as set forth in Section 4.1(a) the correspondingly numbered sections of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, law or (4) as otherwise expressly required contemplated by this Agreement, the Company covenants and agrees that, prior to the Effective Time (unless Parent shall otherwise consent, which consent shall not be unreasonably withheld and provided that, with respect to clause (ii) of paragraph (e), if Parent shall not have responded within two business days to a written request by the Company for consent then Parent shall be deemed to have consented to the action that was the subject of the request) the Company shall, and shall cause the Company Subsidiaries its Subsidiary to, use commercially reasonable efforts to :
(a) conduct its business their respective businesses only in the ordinary and usual course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreementand, except (A) to the extent Parent shall otherwise give its prior consent in writing consistent therewith, use their respective best efforts to preserve their respective business organization intact and maintain their respective existing relations with customers (in the case of subsections (ivexcept as contemplated hereby), suppliers, employees and business associates;
(vi), (viii), (ix), (x), (xii), (xiii), and (xviib) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of create any Company Subsidiary;
subsidiaries; (ii) amend their respective certificate of incorporation or by-laws; (iii) split, combine, subdivide, change, exchange, amend the terms of combine or reclassify any shares of the Company’s their outstanding capital stock or other equity interests of the Company or any Company Subsidiary;
(iiiiv) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than any dividends or distributions only to the extent paid by any wholly owned Company the Subsidiary to the Company or another wholly owned Company SubsidiaryCompany;
(ivc) acquire not (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwisei) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant pledge, dispose of or otherwise permit to become outstanding encumber any additional shares of, or securities convertible or exchangeable for, or options, warrants warrants, calls, commitments or rights of any kind to acquire, any shares of its their capital stock of any class or any other equity interests, property or assets other than (x) shares of Company Common Stock issuable upon exercise of purchase rights outstanding as of the date of this Agreement under the 1999 Stock Purchase Plan (as such plan is in effect on the date hereof) or (y) shares of Company Options;
Common Stock issuable pursuant to the exercise of Company Options outstanding on the date hereof under the Company Stock Option Plans or (z) shares of Company Common Stock issuable pursuant to the 401(k) Plan; (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber (each a "transaction") any assets, including, without limitation, all intellectual property and technology rights which it owns or uses, or enter into any collaboration; (iii) incur or modify any indebtedness; (iv) incur or modify any other liability other than in the ordinary and usual course of business; (v) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company; or (vi) except authorize capital expenditures in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any excess of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company$100,000 per calendar quarter or, other than: (A) sales than the acquisition of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets inventory and supplies in the ordinary course of business consistent with past practice; , make any acquisition of, or investment in, assets or stock of any other person or entity (B) pursuant to written Contracts or commitments existing as including any in-licensing of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viiitechnology); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viid) directly not change or indirectly repurchaseincrease the compensation payable or to become payable to its directors, redeem officers or otherwise acquire employees, or pay any shares performance based bonuses to its employees for the year ended 2001 (other than bonuses and increases in salary in an amount not to exceed $300,000 in the aggregate and provided that the Company would otherwise, after giving effect to the payment of such bonuses, meet the condition to the consummation of the Company’s or any Company Subsidiary’s capital stock or equity interestsOffer set forth in paragraph (f) of Exhibit A hereto), or any other securities or obligations convertible grant (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company except pursuant to the exercise of repurchase rights existing contractual arrangements disclosed in writing to Parent prior to the date of this Agreement; hereof) any severance or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defeasetermination pay to, or cancel enter into any indebtedness for borrowed moneyemployment or severance agreement with, guarantee any such indebtednessdirector, issue officer or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or its Subsidiary; and not establish, adopt, enter into, make any Company Subsidiarynew grants or awards under or amend, (C) grant any rights to severancecollective bargaining, retentionbonus, change in control profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or termination pay to any member of other plan, agreement, trust, fund, policy or arrangement for the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment benefit of any employee of the Company directors, officers or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleemployees;
(xe) except in the ordinary course of businessnot (i) settle or compromise any material claims or litigation or modify, (i)(A) amend or terminate (except for terminations pursuant to the expiration any of the existing term of any Material Contract) any Material Contract their material Contracts or (B) waive, release or assign any material rights under any Material Contracts, or claims or (ii) enter into any Contract with respect to the Company's San Diego facility contract services business pursuant to which the Company would provide any products or agreement that, if in effect on the date of this Agreement, would constitute a Material Contractservices;
(xif) change not amend or modify, or waive, release or assign any of its methods the Company's rights under, the License Agreement, dated as of financial accounting September 22, 1998, by and between the Company and Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. (the "HMR License") or accounting practices in any material the Company's investigational new drug application with respect other than as required by changes in GAAPto tezacitabine;
(xiig) not make (except for elections made in the ordinary course of business), change or revoke any material Tax tax election, change any Tax accounting period or material method of Tax accounting, amend file any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise taking any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent position inconsistent with past practice, of liabilities reflected settle any tax audit, claim or reserved against in the Most Recent Company Balance Sheetlitigation, request any private letter or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve similar ruling or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).tax closing agreement;
(bh) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing permit any insurance policy naming it as a beneficiary or the termination of this Agreementa loss payable payee to be canceled or terminated without notice to Parent, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary and usual course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):; and
(i) amend Parent’s not authorize or either enter into an agreement to do any of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
Except (av) The Company agrees thatas required by applicable Law, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1w) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), (2x) as set forth expressly disclosed in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Letter or (4y) as expressly required by provided for in this Agreement, the Company shallcovenants and agrees as to itself and its Subsidiaries that, from and shall cause after the execution of this Agreement and prior to the earlier of (1) the Effective Time or (2) the valid termination of this Agreement in accordance with ARTICLE VIII (A) the Company Subsidiaries to, shall use its commercially reasonable efforts to conduct its business and the business of its Subsidiaries in the ordinary course of businessbusiness consistent with past practice in all material respects; provided provided, however that any no action expressly that is (i) specifically permitted by the remaining provisions any of subclauses (a) through (v) of Section 6.1(B) shall be deemed a breach of this clause (A) or (ii) expressly disclosed in Section 4.1(a) (including Section 4.1(a) 6.1 of the Company Disclosure ScheduleLetter with respect to any subclause of Section 6.1(B) will not constitute shall be deemed a violation breach of the foregoing. During the period from the date any other subclause of this Agreement through the earlier of the Closing or the termination of this Agreement, except (ASection 6.1(B) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth without limiting the generality of, and in Section 4.1(a) of furtherance of, the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementforegoing, the Company shall not (and shall will not permit any Company Subsidiary of its Subsidiaries to)::
(a) (i) amend its certificate of incorporation or bylaws (or comparable governing documents), other than amendments to the Company’s Organizational Documents or amend the Organizational Documents governing documents of any wholly owned Subsidiary of the Company Subsidiary;
that would not (A) prevent, delay or impair the Merger or the other transactions contemplated by this Agreement or (B) otherwise be material to the Company and its Subsidiaries taken as a whole, (ii) split, combine, subdivide, change, exchange, amend the terms of recapitalize or reclassify any its outstanding shares of the Company’s capital stock or other equity interests (except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction and that would not prevent, delay or any impair the Merger or the other transactions contemplated by this Agreement or otherwise be material to the Company Subsidiary;
and its Subsidiaries taken as a whole), (iii) declare, set aside, make accrue, authorize or pay any dividend or other distribution (whether payable in cash, stock or propertyproperty (or any combination thereof) in respect of any shares of its capital stock (except for any dividends or distributions paid by a direct or indirect wholly owned Subsidiary of the Company to another direct or indirect wholly owned Subsidiary of the Company or to the Company or) or (iv) purchase, repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible or exchangeable into or exercisable for any shares of its capital stock (other than (1) pursuant to the exercise of Company Options or the forfeiture of, or withholding of Taxes with respect to, Company Options, Company Restricted Stock, or Company RSUs or (2) purchases, repurchases, redemptions or other acquisitions of securities of any wholly owned Subsidiary of the Company by the Company or any other wholly owned Subsidiary of the Company);
(b) merge or consolidate with any other Person, or restructure, reorganize or completely or partially liquidate (other than mergers among, or the restructuring, reorganization or liquidation of any wholly owned Subsidiaries of the Company in the ordinary course of business that would not prevent, delay or impair the Merger or the other transactions contemplated by this Agreement) or create any non-wholly owned Subsidiary of the Company;
(c) except as required by applicable Law, or as required by Contract (i) materially increase the cash compensation payable to any director, officer, employee, consultant or individual independent contractor of the Company or any of its Subsidiaries, in each case, other than in the ordinary course of business consistent with past practice (provided that any increase in cash compensation made outside of the ordinary course of business shall only be made following consultation with Parent), (ii) materially increase the material fringe or other material benefits, or pay any bonus other than in the ordinary course, payable to any director, officer, employee, consultant or individual independent contractor of the Company or any of its Subsidiaries with annual base cash compensation in excess of $300,000 per year (provided that any increase in fringe or other benefits outside of the ordinary course of business shall only be made following consultation with Parent), (iii) grant any increase in change in control, retention, severance or termination pay with respect to any shares director, officer, employee, consultant or individual independent contractor of the Company or any of its Subsidiaries, (iv) establish, adopt, enter into, terminate or materially amend, or take any action to accelerate the vesting, payment or funding of any compensation, or benefits under, any material Company Plan, (v) enter into any employment, consulting, or termination agreement with any director, officer, employee, consultant or individual independent contractor of the Company or any of its Subsidiaries whose annual base cash compensation exceeds $300,000 or (vi) enter into any change in control, retention or similar agreement with any director, officer, employee, consultant or individual independent contractor of the Company or any of its Subsidiaries;
(d) incur any Indebtedness, guarantee, endorse, assume or otherwise become liable or responsible for any Indebtedness of another Person or issue any rights to acquire any Indebtedness, except (i) in the ordinary course of business, borrowings under the Company’s capital stock or revolving credit facility as in effect as of the capital stock or other equity interest of any Company Subsidiarydate hereof, other than dividends or distributions only including pursuant to the extent paid by any wholly owned Company’s Existing Credit Agreement or as contemplated in the Company Subsidiary Notes not in excess of $150,000,000, (ii) in replacement of existing Indebtedness which has matured or is scheduled to mature, in each case after the date of this Agreement, on then prevailing market terms or on terms substantially consistent with or more beneficial to the Company or another and its Subsidiaries, taken as a whole, than the Indebtedness being replaced, (iii) inter-company Indebtedness among the Company and its wholly owned Company Subsidiary;
Subsidiaries in the ordinary course of business consistent with past practice, (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Personto the extent not drawn upon and payments are not triggered thereby, letters of credit, bank guarantees, security or performance bonds or similar credit support instruments and (B) any equity interest overdraft facilities or cash management programs, in any other Person (other than investments each case issued, made or entered into in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any the ordinary course of business or division of another Personconsistent with past practice, or (Dv) any material assets except, (1) acquisitions by hedging in compliance with the hedging strategy of the Company from as of the date of this Agreement in the ordinary course of business consistent with past practice and not for speculative purposes;
(e) make or commit to any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; capital expenditures other than in the ordinary course of business consistent with past practice and which do not exceed in the aggregate, for the period between the date of this Agreement and the Closing Date, 110% of the capital expenditures provided for in the budget for fiscal year 2025 previously provided to Parent;
(2f) the purchase other than sales of equipment, supplies and inventory in the ordinary course of business consistent with past practice, transfer, lease, license, sell, assign, mortgage, pledge, place a Lien upon or otherwise dispose of any properties or assets (3) inbound licenses including capital stock of any of its Subsidiaries but not including any Intellectual Property), with a fair market value in excess of $5,000,000 individually or other grants or assignments of Intellectual Property $15,000,000 in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
aggregate (v) except in connection with any transaction between other than transactions among the Company and any its wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries);
(g) issue, issuedeliver, sell, grant grant, transfer, or otherwise permit to become outstanding any additional shares encumber, or authorize the issuance, delivery, sale, grant, transfer or encumbrance of, any shares of its capital stock or other equity or voting interests or any securities convertible or exchangeable into or exercisable for, or any options, warrants or other rights to acquire, any shares of its capital stock or other equity or voting interests, including Shares (including, for the avoidance of doubt, any restricted stock units or performance restricted stock units as contemplated under the Company Stock Plan), except (i) for any Shares issued pursuant to Company Options and Company RSUs outstanding on the date of this Agreement in accordance with the existing terms of such awards (as modified by this Agreement) and the Company Stock Plan that are outstanding on the date hereof; provided, however, that, if the Company has the right to settle any Company Plan or employee benefit agreement, trust, plan, fund or other than shares agreement (including with respect to any Company Option or Company RSU) in cash, the Company shall not settle such Company Benefit Plan or employee benefit agreement, trust, plan, fund or other agreement in Company equity securities instead of cash and (ii) by wholly owned Subsidiaries to the Company Common Stock issuable upon exercise or to any other wholly owned Subsidiary of outstanding Company Optionsthe Company;
(vih) except other than in connection with the ordinary course of business, spend or commit to spend in excess of $5,000,000 individually or $15,000,000 in the aggregate to acquire any transaction between the Company and any wholly owned Company Subsidiary assets or among any wholly owned Company Subsidiariesother property, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (whether by merger, consolidation, operation purchase of lawproperty or assets or otherwise (valuing any non-cash consideration at its fair market value as of the date of the agreement for such acquisition);
(i) acquire or agree to acquire (whether by merger, division consolidation, purchase of property or assets or otherwise), ) any third Person or business or any material Company IP equity interest in such Person, or enter into any material tangible assets joint venture, legal partnership or similar arrangement with any third Person;
(j) acquire, or agree to acquire, fee ownership (or its jurisdictional equivalent) of any real property;
(k) make any material change with respect to its financial accounting policies or procedures, except as required by changes in GAAP (or any interpretation thereof) or by applicable Law;
(l) abandon any material existing line of business or enter into any new line of business other than any line of business that is reasonably ancillary to and a reasonably foreseeable extension of any line of business as of the Company, date of this Agreement;
(m) other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets than in the ordinary course of business consistent with past practice; , make any loans, advances or capital contributions to, or investments in, any Person (B) pursuant other than loans, advances or capital contributions to written Contracts the Company or commitments existing as any direct or indirect wholly owned Subsidiary of the date of this Agreement; Company);
(n) (i) amend or modify in any material respect (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business and in a manner consistent with past practice;
adverse to the Company and its Subsidiaries) or terminate (vii) directly or indirectly repurchase, redeem or otherwise acquire any shares excluding terminations upon expiration of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, term thereof in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights rights, claims or benefits under any Material Contracts, Contract or (ii) enter into any Contract or agreement that, if in effect on that would have been a Material Contract had it been entered into prior to the date of this AgreementAgreement unless it is on terms substantially consistent with, would constitute or on terms more favorable to the Company or its Subsidiaries (and to Parent and its Subsidiaries following the Closing) than, either a Contract it is replacing or a form of such Material Contract;
(xiContract made available to Parent prior to the date hereof; provided that the foregoing shall not prohibit or restrict the ability of the Company or its Subsidiaries to take any action described in this Section 6.1(n) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)business consistent with past practice with respect to Contracts or Material Contracts; provided, further that for the avoidance of doubt, this Section 6.1(n) shall not prohibit or restrict any Company Plans;
(o) settle any action, suit, case, litigation, claim, hearing, arbitration, investigation or other Proceedings before or threatened to be brought before a Governmental Entity, other than settlements if the amount of any such settlement is not in excess of $2,500,000 individually or $5,000,000 in the aggregate, in each case in excess of amounts available under the Company’s applicable insurance policy; provided that such settlements do not involve any non-de minimis injunctive or equitable relief or impose non-de minimis restrictions on the business activities of the Company and its Subsidiaries or Parent and its Subsidiaries;
(p) other than with respect to transactions between or among the Company and its wholly owned Subsidiaries, (i) make or change or revoke any material Tax election, election or make any material change to any annual Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, period; (ii) settle or compromise any material liability for Taxes Tax claim or assessment; (iii) consent to any extension or waiver of any limitation period with respect to any material Tax audit, claim, claim or other proceeding relating to a material amount of Taxes, assessment; (iv) initiate or enter into any closing, voluntary disclosure or similar agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, Taxes; (v) surrender any right to claim a material refund of Taxes or a material offset or other material reduction in liability for Taxes; or (vi) request any ruling or similar guidance with respect to material Taxes;
(q) (i) sell, orassign, other than transfer, lease, license, encumber, abandon or permit to lapse any material Intellectual Property owned or purported to be owned by the Company or any of its Subsidiaries the book value of which is in excess of $5,000,000 in the aggregate (except for licenses granted in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (Bii) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation disclose material trade secrets of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in its Subsidiaries to a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, (other than in the ordinary course of business in to a manner consistent with past practicethird party bound by confidentiality obligations);
(xxir) take enter into any Affiliate Transaction;
(s) effectuate a “plant closing” or cause “mass layoff” (each as defined in the United States Worker Adjustment and Retraining Notification Act) affecting in whole or in part any site of employment, facility, operating unit or employee;
(t) enter into any collective bargaining agreement or other Contract with a labor union or other labor organization with respect to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) employee of the Code Company or (B) result in any of its Subsidiaries or recognize any union or other labor organization as the conditions to bargaining representative for any employee of the Mergers set forth in ARTICLE V not being satisfiedCompany or any of its Subsidiaries or establish any trade union or other employee representative body;
(u) adopt or implement any stockholder rights plan or similar arrangement; or
(xxiiv) authorizeagree, approve resolve or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the earlier of the termination of this Agreement in accordance with Article VIII and the Effective Time (unless Parent shall otherwise approve in writing (such approval not to be unreasonably withheld, delayed or conditioned)), and except as otherwise expressly required or permitted by this Agreement or as required by applicable Law, the business of it and its Subsidiaries shall be conducted in all material respects in the ordinary course of business and, to the extent consistent with the foregoing and the restrictions in the next sentence, the Company and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations substantially intact, maintain satisfactory relationships with Governmental Entities, customers, suppliers, employees and other business relationships having significant business dealings with them) and keep available the services of their key employees and agents; provided that any action specifically permitted by the exceptions to the restrictions set forth in clauses (i)—(xviii) of this Section 6.1(a) shall be deemed in compliance with this sentence. Without limiting the foregoing, from the date of this Agreement through until the earlier of the Closing or the termination of this AgreementAgreement in accordance with Article VIII and the Effective Time, except (1w) to the extent as otherwise expressly required or permitted by this Agreement, (x) as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2y) as is required by applicable Law or (z) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shall, will not and shall cause will not permit its Subsidiaries to:
(i) adopt any change in its certificate of incorporation or bylaws or other applicable governing documents;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person, use commercially reasonable efforts to conduct its except for any such transactions among wholly owned Subsidiaries of the Company;
(iii) make any acquisition of any business or any assets in excess of $5,000,000 individually or $15,000,000 in the aggregate, other than acquisitions of assets acquired from the Company’s vendors or suppliers in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) business of the Company Disclosure Scheduleand its Subsidiaries; Table of Contents (iv) will not constitute a violation issue, sell, pledge, dispose of, grant, transfer, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock or other equity securities of the foregoing. During the period from Company or any of its Subsidiaries or securities convertible or exchangeable into or exercisable for, or give any Person a right to subscribe for or acquire (including options, warrants or other rights of any kind), any shares of capital stock or other equity securities (other than (A) in respect of Company Options, RSUs and PSUs outstanding as of the date of this Agreement through as required by their terms as in effect on the earlier of the Closing or the termination date of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned Agreement or delayed), (B) as set forth in Section 4.1(a) the issuance of shares by a wholly owned Subsidiary of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(ai) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing, and except as otherwise expressly contemplated by this Agreement) and except as required by applicable Laws, the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of the Company and its Subsidiaries. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except (A) as otherwise expressly required by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), ) or (2C) as set forth in Section 4.1(a) 6.1 of the Company Disclosure ScheduleLetter, the Company will not and will not permit its Subsidiaries to:
(3a) adopt or propose any change in its articles of organization or by-laws or other applicable governing instruments;
(b) merge or consolidate the Company or any of its Subsidiaries with any other Person, except for any such transactions among wholly-owned Subsidiaries of the Company or pursuant to Contracts in effect as may be required by applicable Legal Requirements, or (4) as expressly required by of the date of this Agreement, the Company shallor restructure, and shall cause the Company Subsidiaries toreorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, use commercially reasonable efforts to conduct its operations or businesses;
(c) acquire assets or any securities of any business from any other Person, whether or not in the ordinary course of business; provided that , in any action expressly permitted by the remaining provisions transaction or series of this Section 4.1(arelated transactions, other than (i) acquisitions in accordance with capital budgets previously provided, (including Section 4.1(aii) acquisitions pursuant to Contracts in effect as of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (Aiii) to the extent Parent shall otherwise give its prior consent in writing (acquisitions with a value or purchase price in the case aggregate of subsections less than $50,000 or (iv), (vi), (viii), (ix), (x), (xii), (xiii), ) acquisitions of inventory and (xvii) other daily purchases in the ordinary course of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiarybusiness;
(iid) splitissue, combinesell, subdividepledge, changedispose of, exchangegrant, amend transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any its Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, other than required issuances of shares of Company Common Stock upon the exercise of Company Stock Options outstanding as of the date of this Agreement;
(iiie) create or incur any Lien material to the Company or any of its Subsidiaries on any assets of the Company or any of its Subsidiaries having a value in excess of $100,000 in the aggregate;
(f) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company) in excess of $100,000 in the aggregate;
(g) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivh) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
(by merger, consolidation, operation of law, acquisition of stock, other equity interests i) incur any indebtedness for borrowed money or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division guarantee such indebtedness of another Person, or (D) issue or sell any material assets except, (1) acquisitions by debt securities or warrants or other rights to acquire any debt security of the Company from or any wholly owned Company Subsidiary or among any wholly owned Company of its Subsidiaries; (2) the purchase of equipment, supplies and inventory except for indebtedness for borrowed money incurred in the ordinary course of business consistent with past practices (i) not to exceed $100,000 in the aggregate, (ii) in replacement of existing indebtedness for borrowed money on terms substantially consistent with or more beneficial than the indebtedness being replaced, (iii) guarantees incurred in compliance with this Section 6.1 by the Company of indebtedness of wholly-owned Subsidiaries of the Company or (3iv) inbound licenses interest rate swaps on customary commercial terms consistent with past practice and not to exceed $250,000 of notional debt in the aggregate;
(j) except as set forth in the capital budgets previously provided, make or authorize any capital expenditure in excess of $100,000 in the aggregate during any twelve (12) month period;
(k) enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement;
(l) make any changes with respect to accounting policies or procedures, except as required by changes in GAAP;
(m) settle any litigation or other grants proceedings before a Governmental Entity for an amount in excess of $100,000 (net of insurance coverage) or assignments any disputed obligation or liability of Intellectual Property the Company in excess of such amount;
(n) amend, modify or terminate any Material Contract, or cancel, modify or waive any debts or claims held by it or waive any rights having in each case a value in excess of $100,000;
(o) make or change any material Tax election, change an annual accounting period, file any amended Tax Return, enter into any closing agreement, waive or extend any statute of limitation with respect to Taxes, settle or compromise any Tax liability, claim or assessment, surrender any right to claim a refund of Taxes or take any other similar action relating to the filing of any Tax Return or the payment of any Tax;
(p) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any assets, product lines or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except for product sales in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary , sales of obsolete assets or among any wholly owned Company Subsidiariessales, issueleases, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock licenses or other equity interestsdispositions of assets with a fair market value not in excess of $100,000 in the aggregate, other than shares pursuant to Contracts in effect prior to the date of Company Common Stock issuable upon exercise of outstanding Company Optionsthis Agreement;
(viq) except as set forth in connection with any transaction between Section 5.1(h)(i) of the Company and Disclosure Letter, or as otherwise required by applicable Law, (i) grant or provide any wholly owned Company Subsidiary severance or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease termination payments or license benefits to any third partydirector, officer or incur any Lien on employee of the Company or any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrancesexcept, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course case of business in a manner consistent with past practice or of obsolete equipment or assets employees who are not officers, in the ordinary course of business consistent with past practice; , (Bii) pursuant to written Contracts increase the compensation, bonus or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers pension, welfare, severance or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchasebenefits of, redeem or otherwise acquire pay any shares of the Company’s or any Company Subsidiary’s capital stock or equity interestsbonus to, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions new equity awards to any other Persondirector, except for any indebtedness among the Company and its wholly owned Company Subsidiaries officer or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiaryof its Subsidiaries, (Ciii) grant establish, adopt, amend or terminate any rights Benefit Plan or Pension Plan or amend the terms of any outstanding equity-based awards, (iv) take any action to severanceaccelerate the vesting or payment, retentionor fund or in any other way secure the payment, of compensation or benefits under any Benefit Plan, to the extent not already provided in any such Benefit Plan, (v) change in control any actuarial or termination pay other assumptions used to calculate funding obligations with respect to any member of Benefit Plan or to change the Company Boardmanner in which contributions to such plans are made or the basis on which such contributions are determined, current employee except as may be required by GAAP; or former employee (vi) forgive any loans to directors, officers or employees of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;its Subsidiaries.
(xr) except in the ordinary course of business, (i)(A) amend knowingly take any action or terminate (except for terminations pursuant omit to the expiration of the existing term of take any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure action that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added reasonably likely to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Merger set forth in ARTICLE V Article VIII not being satisfied; or
(xxiis) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergersforegoing;
(ii) split, combine, subdivide, change, exchange, amend the terms Parent shall not knowingly take or permit any of or reclassify its Subsidiaries to take any shares of Parent’s capital stock or other equity interests action that is reasonably likely to result in any of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only conditions to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest Merger set forth in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessArticle VIII not being satisfied.
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees that, during after the period date hereof and until the Effective Time, its business and the business of its Subsidiaries shall be conducted in the ordinary and usual course, consistent with past practice in all material respects. To the extent consistent with the foregoing sentence, the Company and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of the Company and its Subsidiaries. Nothing in the foregoing sentences shall prohibit or restrict the Company and its Subsidiaries from the date of this Agreement through to the earlier Effective Time from taking any of the Closing following actions: (i) actions approved by Purchaser in writing, which approval shall not be unreasonably withheld, delayed or conditioned; (ii) any action expressly required or permitted by this Agreement; and (iii) any action required by Law. Without limiting the termination generality of the foregoing and in furtherance thereof, from the date hereof until the Effective Time, except (A) as otherwise expressly required or permitted by this Agreement, except (1B) to the extent Parent shall otherwise give its prior consent as Purchaser may approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2C) as set forth in Section 4.1(a6.1 of the Company Disclosure Letter or (D) as required by any applicable Laws (including any requirement of the SEC), the Company will not and will not permit its Subsidiaries to:
(a) adopt or propose any change in its certificate of incorporation or by-laws or other applicable governing instruments;
(b) acquire or agree to acquire (i) by merging or consolidating with, or by purchasing a substantial portion of the stock, or other ownership interests in, or substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association, joint venture, limited liability company or other entity or division thereof or (ii) any assets that would be material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole, except purchases of supplies, equipment, services and inventory in the ordinary course of business consistent with past practice;
(c) restructure, recapitalize, reorganize or completely or partially liquidate the Company or adopt a plan of complete or partial liquidation with respect to the Company or adopt resolutions providing for or authorizing any of the foregoing;
(d) other than (i) Shares issuable pursuant to Company Options outstanding and disclosed as outstanding in Section 5.1(b) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, Letter and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) splitShares issuable pursuant to the exercise of Warrants, combineissue, subdividesell, changepledge, exchangedispose of, amend grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiie) make any loans, advances (except for advances to employees or consultants in respect of travel and business expenses) or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company);
(f) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivg) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business transactions involving direct or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any indirect wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issuereclassify, sellsplit, grant combine, subdivide or redeem, purchase or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its capital stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares of Company Common pursuant to the Stock issuable upon exercise of outstanding Company OptionsPlans and the Warrant Agreements;
(vih) except redeem, repurchase, prepay, cancel, incur or otherwise acquire, or modify, in connection with any transaction between material respect in a manner adverse to the Company, its Subsidiaries, Purchaser or Merger Sub, any indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for with respect to (i) any such redemption, repurchase, prepayment, cancellation, incurrence or acquisition of indebtedness incurred or repaid under the Amended and Restated Credit Agreement with Bank of America, N.A. and the other banks party thereto, dated as of September 29, 2005 or (ii) any such redemption, repurchase, prepayment, cancellation, incurrence or acquisition not to exceed $2,500,000 in the aggregate or (iii) guarantees incurred in compliance with this Section 6.1 by the Company Permitted Encumbrances, or otherwise dispose any of (by merger, consolidation, operation its direct or indirect wholly owned Subsidiaries of law, division indebtedness of any direct or otherwise), any material Company IP or material tangible assets indirect wholly owned Subsidiary of the Company;
(i) except as set forth in each of the quarterly capital budgets previously made available to Purchaser and consistent therewith, other than: (A) sales make or authorize any capital expenditures in excess of inventory, goods or services $500,000 in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets aggregate;
(j) other than in the ordinary course of business consistent with past practice; , (A) enter into, renew, terminate, fail to renew or amend in any material respect any Contract that is or would be a Material Contract, (B) pursuant to written Contracts enter into, amend, modify or commitments existing as waive any rights under any contract or agreement or transaction with an executive officer or director of the date Company (or, other than on arm’s-length terms in the ordinary course of this Agreement; business, any Person in which such executive officer or director, or any immediate family member of such executive officer or director, has over a 5% interest) involving amounts in excess of $75,000, or (C) enter into any line of business other than lines of business currently conducted by the Company and its Subsidiaries;
(k) make any changes with respect to accounting policies or procedures, except as security for required by Law or changes in applicable generally accepted accounting principles (of which, to the knowledge of the Company, there are none) or write up, write down or write off the book value of any borrowings permitted by Section 4.1(a)(viii); assets of the Company or (D) licenses granted to customers or its Subsidiaries, other third parties than in the ordinary course of business in a manner and consistent with past practice;
(viil) directly or indirectly repurchasepay, redeem discharge, waive, compromise settle or otherwise acquire satisfy any shares of the Company’s Action, whether now pending or any Company Subsidiary’s capital stock or equity interestshereafter brought, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants at a cost materially in excess of the amount accrued or reserved in the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; Reports or (B) shares pursuant to terms that impose material adverse restrictions on the business of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries as currently conducted or among any wholly owned Company Subsidiaries (and guarantees C) on a basis that reveals a finding or an admission of a material violation of Law by the Company or the Company Subsidiaries in respect thereof)its Subsidiaries;
(ixm) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(AA) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change (B) enter into any Tax accounting period settlement or material method compromise of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise (C) file any amended Tax Return with respect to any material liability for Taxes or Tax, (D) change any annual Tax auditaccounting period, claim, or other proceeding relating to a material amount of Taxes, (E) enter into any closing agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a any material Tax liabilityTax, request any Tax ruling from any Governmental Entity, surrender any right (F) fail to claim a material Tax refund for which it is entitled, or (G) make material changes to their Tax accounting methods or principles;
(n) transfer, sell, lease, license, sublicense, mortgage, pledge, surrender, encumber, divest, cancel, abandon, restrict or allow to lapse or expire or otherwise dispose of Taxesany material assets, orproduct lines or businesses of the Company or its Subsidiaries, other than including capital stock of any of its Subsidiaries, except in the ordinary course of business, agree and except for obsolete assets and except for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $1,000,000 in the aggregate, other than pursuant to an extension Contracts in effect prior to the date hereof;
(o) except as required pursuant to existing written, binding agreements in effect prior to the date hereof or waiver any Benefit Plan which is set forth in Section 6.1(o) of the statute Company Disclosure Letter, (i) (A) hire, promote or terminate any director, employee or consultant earning more than $125,000 in aggregate annual compensation (other than, in the case of limitations this clause (A), (x) employee terminations for cause, (y) in connection with new hires to replace departed key employees or consultants in the ordinary course of business consistent with past practice and on substantially similar terms and conditions and (z) in connection with promotions in the ordinary course of business consistent with past practice); or (B) implement or effect any reduction in force, lay off or similar program or effort concerning the termination of employees (other than, in the case of this clause (B), (x) employee terminations for cause and (y) employee terminations pursuant to and consistent with past practice); (ii) grant or provide any new severance or new termination payments or new material benefits to any former or existing director, officer, employee or consultant of the Company or any of its Subsidiaries, (iii) increase the compensation, fees, bonus or pension, profit sharing, welfare, severance or other benefits of or pay any bonus to any employee or director or make any new equity awards to any director, officer, consultant or employee of the Company or any of its Subsidiaries (other than, in all such cases, employees earning $75,000 or less in aggregate annual compensation), (iv) establish, adopt, amend or terminate any Benefit Plan or amend the terms of any outstanding equity-based awards, (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Benefit Plan, to the extent not already provided in any such Benefit Plan, (vi) change any actuarial or other assumptions used to calculate funding obligations with respect to a material amount any Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; or (vii) forgive any loans to directors, officers or, outside the ordinary course of Taxesbusiness, employees of the Company or any of its Subsidiaries;
(xiiip) except on substantially similar terms and conditions to the terms and conditions set forth on Section 6.1(p) of the Company Disclosure Letter, establish, adopt, enter into or amend any collective bargaining agreement or other than consignment of Company Products agreement with any labor union or organization;
(q) (A) transfer to one or more third parties, mortgage or encumber, or except in the ordinary course of business, make license or sublicense, any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting material Intellectual Property or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuancefee, renewal, maintenance and other payments that become due with respect take any action or make any filing reasonably necessary to any maintain its ownership of the material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceowned Intellectual Property;
(xxir) take or cause fail to be taken any actionmaintain in full force and effect, or knowingly fail to take replace or cause to be taken any actionrenew, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying material insurance policies existing as a reorganization within the meaning of Section 368(a) of the Code date hereof that are maintained by the Company or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedits Subsidiaries; or
(xxiis) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (Sourcecorp Inc)
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through hereof and until the Effective Time or earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2w) as set forth in Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3x) as may be required by applicable Legal Requirements, otherwise expressly contemplated or (4) as expressly permitted or required by this Agreement, (y) to the extent consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned) or (z) as required by applicable Law, the Company shall, and shall cause the Company its Subsidiaries to, use commercially reasonable efforts cause the business of it and its Subsidiaries to conduct its business be conducted in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of course, and the Company Disclosure Schedule) will not constitute a violation shall use reasonable best efforts to, and shall cause each of its Subsidiaries to use reasonable best efforts to, preserve its business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates. Notwithstanding the generality of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) and subject to the extent Parent shall otherwise give its prior consent exceptions set forth in writing clauses (in the case of subsections (iv), (vi), (viii), (ixw), (x), (xii), (xiii), y) and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(az) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementimmediately preceding sentence, the Company shall not (not, and shall cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend the Company’s Organizational Documents certificate of incorporation, bylaws or amend comparable governing documents of the Organizational Documents Company or any of any Company Subsidiaryits Subsidiaries;
(ii) splitissue, combinesell, subdividepledge, changedispose of, exchangegrant, amend the terms of transfer or reclassify otherwise encumber any shares of the Company’s capital stock stock, voting securities, partnership interest, membership interest or similar interest or any option, warrant, right or security convertible, exchangeable or exercisable therefor or other equity interests instrument or right the value of which is based on any of the foregoing (collectively, “Equity Interests”) of the Company or any of its Subsidiaries (including any Company SubsidiaryEquity Awards), other than (A) issuance of Shares pursuant to Company Stock Options outstanding on the date hereof under the Company Plans in accordance with the terms thereof, and (B) issuances of Shares in connection with the matching of contributions under the (1) Dynegy Midwest Generation, Inc. 401(k) Savings Plan for Employees Covered under a Collective Bargaining Agreement (As Amended and Restated Effective January 1, 2009); (2) Dynegy Midwest Generation, Inc. 401(k) Savings Plan (As Amended and Restated Effective January 1, 2009); (3) Dynegy Inc. 401(k) Savings Plan (As Amended and Restated Effective January 1, 2009); and (4) Dynegy Northeast Generation, Inc. Savings Incentive Plan (As Amended and Restated Effective January 1, 2009), in each case in accordance with the terms thereof;
(iii) split, combine, subdivide or reclassify any of its Equity Interests;
(iv) declare, set aside, make establish a record date for, or pay any dividend dividends on or make any other distribution distributions (whether payable in cash, stock stock, property or propertya combination thereof) with in respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiaryof its Equity Interests, other than any dividends or distributions only to the extent paid by from any wholly owned Subsidiary of the Company Subsidiary to the Company or to another wholly owned Company Subsidiarysuch Subsidiary of the Company;
(ivv) repurchase, redeem or otherwise acquire (by mergerany of its Equity Interests, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for (A) mandatory sinking fund obligations existing on the date hereof and disclosed in Section 6.1(a)(v) of the Company Disclosure Letter and (B) redemptions, purchases or acquisitions pursuant to the exercise or settlement of Company Stock Options, employee severance, retention, termination, change of control and other contractual rights existing on the date hereof on the terms in effect on the date hereof, including with respect to Company Restricted Stock;
(vi) incur, issue, or modify in any other material respect the terms of, any Indebtedness, or assume, prepay, defease, cancel, acquire, guarantee or endorse, or otherwise become responsible for (whether directly or indirectly, contingently or otherwise), the indebtedness of any Person, except for (A) advances of credit incurred under the Company’s existing credit facilities in an aggregate amount not to exceed $2,500,000, (B) any equity interest in any other Person letters of credit issued under the Credit Agreement (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (Cx) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business consistent with past practices for non-trading activities but in any event in an aggregate amount not to exceed $25,000,000 or (3y) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the sale or purchase of Derivative Products, physical electricity products, or fuel commodities for the Company’s assets in accordance with Section 6.1(a)(xix) of the Company and Disclosure Letter, (C) letters of credit issued under the Credit Agreement to support positions in place as of the date of this Agreement or (D) Indebtedness owed by any wholly owned Subsidiary of the Company Subsidiary to the Company or among any other wholly owned Company Subsidiaries, issue, sell, Subsidiary of the Company;
(vii) grant or otherwise permit to become outstanding incur any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestsLien, other than shares (A) Permitted Liens, (B) Liens for current Taxes, assessments or other charges of Company Common Stock issuable upon exercise of outstanding Company Options;
a Governmental Entity not yet due and payable or which is being contested in good faith through appropriate proceedings, (viC) except in connection with any transaction between pledges or deposits by the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services Subsidiaries in the ordinary course of business under workmen’s compensation Laws, unemployment insurance Laws or similar legislation, (D) good faith deposits in connection with Contracts (other than for the payment of Indebtedness) or leases to which the Company or one of its Subsidiaries is a manner consistent with past practice or of obsolete equipment or assets party, in each case, in the ordinary course of business consistent with past practice; , (BE) pursuant deposits to written Contracts secure public or commitments existing as statutory obligations of the date Company or one of this Agreement; its Subsidiaries, or (C) to secure surety or appeal bonds to which such entity is a party, or deposits as security for any borrowings permitted by Section 4.1(a)(viii); contested Taxes, in each case incurred or made in the ordinary course of business consistent with past practice, (DF) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
practice by the Company or its Subsidiaries, (viiG) directly Liens permitted under the outstanding Indebtedness of the Company and its Subsidiaries as of the date hereof, (H) Liens granted in connection with any Indebtedness permitted under Section 6.1(a)(vi), and (I) Liens granted or indirectly repurchaseincurred in connection with the sale or purchase of Derivative Products, redeem physical electricity products, or otherwise acquire any shares of fuel commodities for the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain eventsassets in accordance with Section 6.1(a)(xix) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant Disclosure Letter or to the exercise support positions in place as of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (A) except (1) to the extent required by applicable Law or (2) to the extent required by written agreements existing on the date of this Agreement that have been disclosed or made available to Parent prior to the date hereof, grant or announce any stock option, equity or incentive awards or increase in the salaries, bonuses or other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company compensation and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees benefits payable by the Company or any of its Subsidiaries to any of the employees, officers, directors or other independent contractors who provide services in an individual capacity of the Company Subsidiaries or any of its Subsidiaries, (B) except to the extent required by written agreements existing on the date of this Agreement that have been disclosed or made available to Parent, pay or agree to pay any pension, retirement allowance, termination or severance pay, bonus or other employee benefit not required by any existing Company Plan to any employee, officer, director or other independent contractors who provide services in an individual capacity of the Company or any of its Subsidiaries, whether past or present, or take any action to accelerate vesting of any right to compensation or benefits, (C) except to the extent required by written agreements existing on the date of this Agreement that have been disclosed or made available to Parent, enter into or amend any Contracts of employment or any consulting, bonus, severance, retention, retirement or similar agreement, (D) change any actuarial or other assumptions used to calculate funding obligations with respect thereof)to any Company Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (E) change the accrual rate for the Company’s short-term incentive plans used to prepare the Company’s financial statements, (F) forgive any loans to directors, officers or employees of the Company or any of its Subsidiaries, or (G) except as required to ensure that any Company Plan is not then out of compliance with applicable Law, enter into or adopt any new or renew, amend or terminate any existing Company Plan or benefit arrangement if such adoption, renewal, amendment or termination would result in a material cost to the Company or any of its Subsidiaries;
(ix) (A) adopt, terminate or amend hire any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose individual independent contractor with total expected annual base salary exceeds salary, including commissions, in excess of $100,000 (100,000, other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President vacancies arising in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., at annual base salary levels not in excess of 120% of prevailing market rates or wage rates and target annual cash bonus opportunities(B) in amounts that are subject to Section 6.9(f), terminate the employment of any Company Employee who participates in the ordinary course of business Dynegy Inc. Executive Change in a manner consistent with past practice; and Control Severance Pay Plan (6) Effective April 3, 2008), except for “cause” thereunder or otherwise take any other actions set forth action that could reasonably result in Section 4.1(a)(ix) the closure of the Company Disclosure ScheduleCompany’s regional headquarters in California;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of businessbusiness and consistent with past practice, (A) make or change any material Tax election, or change the Company’s or such Subsidiary of the Company’s method of accounting for Tax purposes, (B) file any amended Tax Return involving a material amount of additional Taxes, (C) settle or compromise any material Tax liability, or any claim for a material refund of Taxes or enter into any closing agreement with respect to any material amount of Tax, or (D) agree to an extension or waiver of the statute of limitations applicable to the assessment or collection of any material Taxes except, in each case, as required by applicable Law;
(xi) except as required by GAAP, the SEC or applicable Law, change any material accounting policies or principles;
(xii) (A) enter into or assume any Contract that would have been a Company Material Contract had it been entered into prior to the date hereof, (B) terminate, materially amend or waive any material rights under any Company Material Contract or any Contract that would have been a Company Material Contract had it been entered into prior to the date hereof excluding any termination upon expiration of a term in accordance with respect the terms of such Company Material Contract or (C) or waive any material default under, or release, settle or compromise any material claim against the Company or liability or obligation owing to a material amount the Company under any Company Material Contract; provided in each case that the Company or any of Taxesits Subsidiaries shall be permitted to renew or replace any Company Material Contract with one or more Contracts on substantially similar terms;
(xiii) subject to Section 6.16, waive, release, settle or compromise any pending or threatened action, litigation, claim or arbitration or other proceedings before a Governmental Entity if such waiver, release, settlement or compromise by the Company or any of its Subsidiaries (A) is for an amount in excess of $2,500,000 individually or $5,000,000 in the aggregate, or (B) would entail the incurrence of (1) any obligation or liability of the Company in excess of such amount, including costs or revenue reductions, (2) obligations that would impose any material restrictions on the business or operations of the Company or its Subsidiaries;
(xiv) acquire (including by merger, consolidation, or acquisition of stock or assets) any interest in any Person or any division thereof or any assets thereof, excluding acquisitions of supplies, parts, fuel, materials and other inventory in the ordinary course of business consistent with past practice, or make any loan, advance or capital contribution to, or investment in, any Person or any division thereof, other than consignment (A) any such acquisitions, loans, advances, contributions or investments that are for consideration not in excess of $1,000,000 individually or $5,000,000 for all such transactions by the Company and its Subsidiaries in the aggregate or (B) loans, advances or capital contributions to or among the Company and wholly owned Subsidiaries of the Company;
(xv) sell, transfer, lease, license, assign, allow to lapse or otherwise dispose of (including, by merger, consolidation, or sale of stock or assets) any entity, business, assets, rights or properties of the Company or any of its Subsidiaries having a current value in excess of $1,000,000 individually, or $5,000,000 for all such transactions by the Company and its Subsidiaries in the aggregate other than (A) sales, transfers, leases, licenses assignments and other dispositions of inventory, electricity or, subject to Section 6.6(b), other commodities or Derivative Products in the ordinary course of businessbusiness consistent with past practice, (B) dispositions of obsolete or worthless assets or properties in the ordinary course of business consistent with past practice or (C) transactions solely among the Company and/or any of its Subsidiaries;
(xvi) authorize or make any capital expenditure, other than (A) any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) Company’s business plan set forth in on Section 4.1(a)(xiii6.1(a)(xvi) of the Company Disclosure Schedule Letter, (a “Non-Budgeted Capital Expenditure”), except B) capital expenditures that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would are not, in the aggregate, exceed in excess of $5,000,000 above the aggregate CapEx Budget capital expenditures provided for in such business plan or (C) capital expenditures required by more than $100,000Law or in response to a casualty loss or property damage;
(xivxvii) except as expressly required by applicable Legal Requirements adopt or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) liquidation, dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part reorganization of the Company or any Company Subsidiaryof its Subsidiaries;
(xviii) materially reduce merge or consolidate the amount Company or any of insurance coverage or fail to renew or maintain its Subsidiaries with and into any material existing insurance policiesother Person;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business modify in any material respect the Commodity Risk Policy, the Company Trading Guidelines or any similar policy, other than modifications that are more restrictive to the Company and its Subsidiaries, or (B) terminate the sale or allow to lapse any material purchase of Derivative Products, physical electricity products, or fuel commodities for the Company’s assets that are not in accordance with Section 6.1(a)(xix) of the Company PermitsDisclosure Letter;
(xx) (A) fail to pay any issuanceenter into, renewal, maintenance and other payments that become due with respect or related to Dynegy ▇▇▇▇ Landing, LLC, Dynegy Morro Bay, LLC, Dynegy Oakland, LLC and Casco Bay Energy Company, LLC, any material Company Registered IP or otherwise abandonenergy, cancelancillary services, fuel, emissions allowance, credit, or permit to lapse any material Company Registered IPoffset, transmission, transportation, or storage transactions with a term extending through the later of (i) November 15, 2010, and (ii) the end of the prompt month, other than electric capacity sales in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceorganized markets requiring mandatory bidding;
(xxi) take fail to maintain in full force and effect material insurance policies covering the Company and its Subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practice unless the Company determines in its reasonable commercial judgment that the form or cause amount of such insurance should be modified;
(xxii) permit any letters of credit to be taken issued other than letters of credit issued under the Credit Agreement by JPMorgan Chase Bank, N.A., Citibank, N.A, Credit Suisse, Cayman Islands Branch and ABN AMRO BANK N.V;
(xxiii) subject to Section 6.2, take any action, or knowingly fail to take or cause to be taken any action, action which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Merger set forth in ARTICLE V Article VII not being satisfiedsatisfied or delaying the satisfaction of any such conditions, or that would reasonably be expected to prevent, delay, impair or interfere with the ability of the Company to consummate the Merger; or
(xxiixxiv) authorizecommit, approve authorize or enter into any agreement or make any commitment agree to take any of the foregoing actions described in clauses or enter into any letter of intent (ibinding or non binding) through (xxi) or similar agreement or arrangement with respect to any of this Section 4.1(a)the foregoing actions.
(b) Neither Parent agrees thatnor Merger Sub shall take or permit any of their Affiliates to take any action that is reasonably likely to prevent or delay the consummation of the Merger, during the period from NRG Sale or the date of other transactions contemplated by this Agreement through or the earlier NRG PSA. In furtherance and not in limitation of the Closing or the termination of this Agreementforegoing, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent Merger Sub shall, and Parent shall cause the Parent Subsidiaries Merger Sub to, use commercially reasonable efforts (x) not consent to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) any request by NRG for approval to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirementstake any action, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parentwaive NRG’s or either of the Acquisition Subsits Affiliates’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect failure to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessperfo
Appears in 1 contract
Sources: Merger Agreement (Dynegy Inc.)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during after the period date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing (such approval not to be unreasonably withheld, delayed or conditioned)), and except as otherwise expressly contemplated or permitted by this Agreement or as required by a Governmental Entity or applicable Laws, the business of it and its Subsidiaries shall be conducted in all material respects in the ordinary course of business and, to the extent consistent with the foregoing, the Company and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations substantially intact, maintain satisfactory relationships with Governmental Entities, customers and suppliers having significant business dealings with them and keep available the services of their key employees; provided, however, that no action taken by the Company or its Subsidiaries with respect to matters specifically addressed by clauses (i)-(xviii) of this Section 6.1(a) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. In furtherance of the foregoing, from the date of this Agreement through until the earlier of the Closing Effective Time, except (A) as otherwise expressly contemplated or the termination of permitted by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, Law or any Governmental Entity or (D) as expressly required by this Agreementset forth in Section 6.1(a) of the Company Disclosure Letter, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents adopt any change in its certificate of incorporation or amend the Organizational Documents of any Company Subsidiarybylaws or other applicable governing instruments;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineexcept for any such transactions among wholly-owned Subsidiaries of the Company;
(iii) make any material acquisition of assets outside of the ordinary course of business, subdivideother than acquisitions (A) pursuant to Contracts in effect as of the date of this Agreement, changeor (B) that would be permissible under clause (ix) below;
(iv) issue, exchangesell, amend pledge, dispose of, grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than (A) the issuance of Shares upon the exercise of Company SubsidiaryOptions; or (B) the issuance of Shares to Novartis Pharma AG upon the occurrence of the preceding subclause (A), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company) in excess of $2,000,000 in the aggregate other than loans, advances, capital contributions or investments made in the ordinary course of business;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by merger, consolidation, operation any of law, acquisition its capital stock or securities convertible or exchangeable into or exercisable for any shares of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person its capital stock (other than investments the retention or acquisition of any Shares tendered by current or former employees or directors in equity securities that constitute short term investments that are accounted order to pay Taxes in connection with the exercise of Company Options);
(viii) incur any indebtedness for as cash equivalents), (C) any business borrowed money or division guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries, other than (DA) any material assets exceptin the ordinary course of business (including to fund expenditures permissible under clauses (iii), (1v) acquisitions by the Company from and (ix) of this Section 6.1(a)), (B) Permitted Liens or (C) other indebtedness in an aggregate principal amount not to exceed $2,000,000 outstanding at any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; time;
(2ix) the purchase of equipment, supplies and inventory except for expenditures made in the ordinary course of business or those related to operational emergencies, equipment failures or outages, make or authorize any capital expenditure in excess of $2,000,000 in the aggregate during any calendar year;
(3x) inbound licenses make any material changes with respect to financial accounting policies or procedures, except as required by GAAP;
(xi) settle or compromise any litigation or other grants proceedings before any arbitrator, court or assignments a Governmental Entity that (A) relates to the transactions contemplated hereby, (B) does not relate to the transactions contemplated hereby and (I) involves the payment of Intellectual Property monetary damages that exceed $2,000,000 individually or in the aggregate during any calendar year, net of any amount covered by insurance or indemnification or (II) imposes or requires actions that would have a material effect on the continuing operations of the Company or (C) relates to any litigation set forth on Section 5.1(a) of the Company Disclosure Letter;
(xii) make or cause to be made any material Tax election, change any material method of accounting or file or cause to be filed any amended Tax Return or claim for refund of Taxes;
(xiii) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any assets, licenses, rights, operations, product lines or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, other than Permitted Liens or transactions (A) in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection , including with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license respect to any third party, Intellectual Property or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties Contracts, including IP Contracts, in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing effect prior to the date of this Agreement; ;
(xiv) except as required pursuant to any Contract or Benefit Plan in effect on the date of this Agreement or as required by applicable Law (A) grant or provide any bonus, severance, termination, change of control, or retention payments or benefits to, or increase in any manner the bonus, severance, termination, change of control, or retention payments or benefits of, any director, officer, employee or independent contractor of the Company or its Subsidiaries, (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options grant, modify or for withholding Taxes incurred amend any equity or equity-based awards that may be settled in connection with the exercise, vesting Shares or settlement of Company Options, as applicable, in accordance with the terms any other securities of the applicable award;
Company or its Subsidiaries, (viiiC) incur (increase the compensation, bonus, fringe or other than draws on existing revolving loans)benefits of any director, redeemofficer, repurchase, prepay (other than prepayments of revolving loans), defease, employee or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Personindependent contractor, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries annual merit-based base pay increases (and guarantees by corresponding increases to cash incentive opportunities) to non-Designated Officers consistent with past practice and that do not exceed 3% per individual and 2% in the Company or the Company Subsidiaries in respect thereof);
aggregate, (ixD) (A) establish, adopt, enter into, terminate or amend any Company Benefit Plan except or any other plan, agreement, program, policy or arrangement that would be a Benefit Plan if it were in existence as of the date of this Agreement (other than routine changes to welfare plans or any changes to Benefit Plans that would not result in more than a de minimis increase to the extent permitted by clauses (BCompany’s costs under such Benefit Plans), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or take any action to accelerate the vesting or payment of, the of any compensation or benefits under any Benefit Plan except as provided in this Agreement or (F) hire any employee or officer with an annual base salary in excess of $150,000 (other than the hiring of any member of the Company Board, current employee, employees or former employee of officers to replace any employees or officers who left the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change its Subsidiaries after the date hereof or in control or termination pay to any member fulfillment of open job requisitions on the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or abovedate hereof), or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (its Subsidiaries other than for just cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) except as required by applicable Law, enter into into, adopt, or amend any agreement, understanding or arrangement with respect to the voting of any capital stock collective bargaining agreement or other equity interests of the Company (including any voting trust)agreement with a labor union, other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement works council or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholderssimilar organization;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in or except for Contracts that relate to the Key Product (including any Intellectual Property related thereto) (A) enter into any contract or agreement that would be a manner consistent Material Contract if it had been entered into prior to the date of this Agreement, (B) terminate, amend, modify, renew or waive any material rights under any Material Contract or (C) take any action set forth on Section 6.1(a)(xvi)(C) of the Company Disclosure Letter with past practicerespect to any Material Contract;
(xxixvii) take enter into, terminate, amend, modify, renew or cause to be taken waive any actionmaterial rights under any IP Contracts, or knowingly fail sell, transfer or license to take any Person or cause otherwise adversely amend or modify any rights to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) Intellectual Property of the Code Company or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedCompany Subsidiary; or
(xxiixviii) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of Nothing contained in this Agreement through is intended to give Parent, directly or indirectly, the earlier right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Parent and the Closing or Company shall exercise, consistent with the termination terms and conditions of this Agreement, except (1) to the extent the Company shall otherwise give complete control and supervision over its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition SubsSubsidiaries’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessrespective operations.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier Except as set forth in Section 6.01 of the Closing Company Disclosure Letter, required by Law or the termination of this Agreement, except (1) consented to the extent Parent shall otherwise give its prior consent in writing in advance by Parent (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) during the period from the date hereof until the earlier of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by Effective Time and the valid termination of this AgreementAgreement pursuant to Section 9.01, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct (x) carry on its business only in the ordinary course of business; provided that , (y) use commercially reasonable efforts to preserve intact its current business organization and to preserve its relationships and goodwill with customers, suppliers, employees, licensors, licensees, distributors, lessors and others having significant business dealings with the Company or any action expressly permitted by of its Subsidiaries and (z) comply with applicable Law in all material respects. Without limiting the remaining provisions generality of this the foregoing, except as set forth in Section 4.1(a) (including Section 4.1(a) 6.01 of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing Letter, required by Law or the termination of this Agreement, except (A) consented to the extent Parent shall otherwise give its prior consent in writing in advance by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) during the period from the date hereof until the earlier of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by Effective Time and the valid termination of this AgreementAgreement pursuant to Section 9.01, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to):, directly or indirectly:
(i) amend the Company’s Organizational Documents declare, set aside or amend the Organizational Documents of pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any Company SubsidiarySecurities or Company Subsidiary Securities or set any record date therefor, other than dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to its parent (provided that neither the Company nor any of its Subsidiaries shall repatriate any material amount of cash as a dividend from any Subsidiary outside of the United States to the Company or any of its U.S. Subsidiaries);
(ii) split, combine, subdivide, change, exchange, reclassify or otherwise amend the terms of any Company Securities or reclassify Company Subsidiary Securities or issue or authorize the issuance of any other securities in lieu of or in substitution for shares of the Company’s capital stock or other equity interests of the Company or any Company SubsidiarySecurities;
(iii) declarerepurchase, set asideredeem or otherwise acquire any Company Securities or Company Subsidiary Securities or any options, make or pay any dividend warrants or other distribution rights to acquire any such Company Securities or Company Subsidiary Securities, other than (whether payable A) the acquisition by the Company of shares of Company Common Stock in cashconnection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay all or a portion of the exercise price of the Company Stock Options, stock (B) the withholding of shares of Company Common Stock to satisfy all or property) a portion of any Tax obligations with respect to Company Equity Awards, and (C) the acquisition by the Company of Company Equity Awards in connection with the forfeiture of such awards;
(iv) issue, deliver or sell any shares of Company Securities or Company Subsidiary Securities or other voting securities or equity interests, any securities convertible or exchangeable into any such shares, voting securities or equity interests, any options, warrants or other rights to acquire any such shares, voting securities, equity interests or convertible or exchangeable securities, any stock-based performance units, any Voting Company Debt or any other rights that give any person the Companyright to receive any economic interest of a nature accruing to the holders of Company Common Stock, other than, in each case, (A) upon the exercise or settlement of Company Equity Awards outstanding on the date hereof or issuances pursuant to the ESPP, in each case in accordance with their terms as of the date hereof, (B) by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Subsidiary of the Company Subsidiaryand (C) as described in Section 6.01(a)(iv) of the Company Disclosure Letter;
(ivv) acquire (by mergermortgage, consolidationpledge, operation hypothecate, grant an easement with respect to, or otherwise encumber or restrict the use of law, acquisition of stock, other equity interests Company Securities or Company Subsidiary Securities or assets, formation properties or rights (including Intellectual Property rights) of a joint venture the Company or otherwiseany of its Subsidiaries, or otherwise create, assume or suffer to exist any Liens thereupon except Permitted Liens and Liens granted as of the date of this Agreement with respect to the Company’s Existing Credit Facility;
(vi) amend the Company Certificate of Incorporation or the Company Bylaws or the comparable organizational documents of any Subsidiary of the Company;
(vii) acquire or agree to acquire from any third person (A) by merging or consolidating with, purchasing an equity interest in or a substantial portion of the assets of, making an investment in or loan or capital contribution to or in any other Personmanner, any person or business, or (B) any equity interest in any other Person (assets that are otherwise material to the Company and its Subsidiaries, other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (Cx) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipmentinventory, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property raw materials acquired in the ordinary course of business, (y) equipment and other assets acquired as contemplated under the Fixed Asset Plan as permitted pursuant to Section 6.01(a)(xi) below, and (z) any other assets for which the consideration payable by the Company or any of its Subsidiaries does not exceed $1,000,000 in the aggregate for all such assets;
1 Note to W&S: Subject to ongoing review by the Company.
(vA) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant lease, license, sub-license or otherwise permit to become outstanding any additional shares dispose of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, otherwise encumber any shares of its capital stock properties, rights or other equity interestsassets (including Intellectual Property rights), other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A1) sales of inventory, goods licenses of Software or sales of professional services in the ordinary course Ordinary Course of Business, (2) sales, relinquishment or other disposition of assets that are obsolete or that are no longer used in, or useful for, the conduct of the business of the Company and its Subsidiaries, in a manner consistent with past practice or of obsolete equipment or assets each case, in the ordinary course Ordinary Course of business consistent with past practice; Business, (B3) pursuant to written sales, licenses, sublicenses or other dispositions in the Ordinary Course of Business permitted under Contracts or commitments existing as of the date of this Agreement; , or (C4) as security for any borrowings permitted by Section 4.1(a)(viii); sales of assets with a value of less than $500,000 individually or (D) licenses granted to customers in a series of related transactions, or other third parties $1,000,000 in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreementaggregate; or (B) shares of abandon or permit to lapse any Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred Registered IP; provided, however, that in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms any of the applicable award;
foregoing cases described in clause (viiiA) incur or (other than draws on existing revolving loansB), redeem, repurchase, prepay (other than prepayments neither the Company nor any of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) its Subsidiaries will distribute or make available (including by contribution to an open source project or community) any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees Software developed by the Company or the Company any of its Subsidiaries in respect thereof)as Open Source Materials without first obtaining Parent’s prior written consent;
(ix) (A) adopt, terminate adopt or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) liquidation, dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in reorganization of the case Company or any of clause (B), transactions between or among direct or indirect wholly owned Company its Subsidiaries;
(xviix) (A) incur, create, assume or otherwise become liable for, any Indebtedness (excluding letters of credit put in place, and capital leases entered into, in each case, in the Ordinary Course of Business) owed to any third person, or amend, modify or refinance any Indebtedness owed to any third person (excluding with respect to letters of credit and capital leases in existence as of the date of this Agreement in the Ordinary Course of Business), (B) make any loans, advances or capital contributions to, or investments in, any other person, other than the Company or any of its wholly owned Subsidiaries (other than advances of expenses and other routine amounts to employees in the Ordinary Course of Business) or (C) redeem, repurchase, prepay, defease, cancel or otherwise acquire any Indebtedness (other than letters of credit and capital leases in the Ordinary Course of Business);
(xi) purchase, or commit to purchase, fixed or other capital assets except as contemplated by and in accordance with the FY18 Fixed Asset Plan set forth in Section 6.01(a)(xi) of the Company Disclosure Letter (the “Fixed Asset Plan”), which Fixed Asset Plan was approved as part of the Company’s FY2018 AOP by the Company Board on February 16, 2017;
(xii) pay, discharge, settle or compromise satisfy any litigationmaterial claims, claimliabilities or obligations (whether absolute, suitaccrued, action asserted or proceedingunasserted, except for settlements contingent or compromises otherwise), other than (A) the payment, discharge or satisfactionsatisfaction in the Ordinary Course of Business, or as required by their terms as in effect on the date hereof of claims, liabilities or obligations reflected or reserved against in the most recent audited financial statements (or the notes thereto) of the Company included in the Filed SEC Documents (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the Ordinary Course of Business, (B) payment of severance or other termination benefits to employees in the Ordinary Course of Business to the extent otherwise permitted pursuant to Section 6.01(a)(xix), (C) payment of fees and expenses to Representatives of the Company incurred in connection with the transactions contemplated by this Agreement; or (D) compromises, settlements or agreements to settle any Action which would not require Parent consent pursuant to Section 6.01(a)(xiii);
(xiii) commence any Action (other than any Action against Parent and Merger Sub with respect to the enforcement of this Agreement), or compromise, settle or agree to settle any Action made or pending by, or against, the Company or any of its Subsidiaries, other than the commencement or settlement of Actions in the Ordinary Course of Business that are unrelated to Intellectual Property Rights and involve only the payment by or to the Company or any of its Subsidiaries of money damages (net of insurance proceeds received) in an amount of no more than $1,000,000 individually or $5,000,000 in the aggregate; provided that the foregoing shall not permit the Company or any of its Subsidiaries to settle any Action (x) that would impose any restrictions or changes (other than de minimis restrictions or changes) to the business or operations of, or result in the imposition of equitable relief on, or require any admission of wrongdoing by, the Company or any of its Subsidiaries, or (y) for which such settlement is not permitted pursuant to Section 7.02;
(A) enter into, terminate (except a termination of any Material Contract by its terms due solely to the passage of time), cancel, amend in any material respect or modify in any material respect any Material Contract or enter into any Contract that, if in effect on the date hereof, would have been a Material Contract, excluding, in each of the foregoing cases but subject to the following proviso, any such Contract which (1) is or would constitute a Material Contract under subsections (ii), (iii), (iv) or (xii) of Section 4.11(a), (2) is a renewal of a Contract made available to Parent on terms no less favorable in all material respects in the aggregate to Company and its Subsidiaries than the terms of such Contract as made available to Parent, (3) is a customer Contract providing for the sale of Company Products, (4) is a distributor Contract providing for third-party distribution of Company Products or (5) is a supplier or vendor Contract providing for the supply of goods or services for use in the production of Company Products, so long as such supplier or vendor Contract does not require and would not reasonably be expected to result in any payments (whether made directly or indirectly via a third person) by the Company or any of its Subsidiaries to any counterparty to such Contract (or any of such counterparty’s Affiliates) in an aggregate amount in excess of $3,000,000 per Contract or series of related Contracts or $15,000,000 in the aggregate, in each case, in any fiscal quarter of the Company, with the foregoing threshold amounts to be pro rated for the remaining period of the current fiscal quarter as of the date of this Agreement; provided that no Contract described in any of the foregoing clauses (1) through (5) shall be so excluded from the restrictions of this Section 6.01(a) if such Contract is (or, if entered into prior to the date hereof, would have been) a Material Contract pursuant to subsection (v), (vi), (viii) or (ix) of Section 4.11(a); and provided, further that no Contract described in the foregoing clause (5) shall be so excluded from the restrictions of this Section 6.01(a) if such Contract contains any purchasing commitment by the Company or any of its Subsidiaries for a term in excess of six (6) months from the date thereof; (B) waive any material term of or any material default under, or release, settle or compromise any material claim against the Company or any of its Subsidiaries or any material liability or material obligation owing to the Company or any of its Subsidiaries under, any Material Contract (except, in each case, as permitted pursuant to Section 6.01(a)(xiii)); (C) enter into any Contract which contains a change of control or similar provision that would require a payment to the other party or parties thereto in connection with the Offer, the Merger, the Support Agreement or the other transactions contemplated herein (including in combination with any other event or circumstance); or (D) amend or modify the Financial Advisor Agreement;
(xv) change its fiscal year or change any of its financial accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or applicable Law, or (other than as required by GAAP for any assets that are required to be marked-to-market on a periodic basis) revalue any of its material assets;
(xvi) (A) change any material method of Tax accounting or make, change or revoke any material Tax election, (B) file any material amended Tax Return or claim for Tax refund, (C) settle or compromise any material Tax liability or refund, (D) extend the statutory period of limitations with respect to the assessment or collection of any material Tax, (E) change any tax period, (F) prepare or file any material Tax Return other than on a basis consistent with past practice (except as otherwise required by a change in applicable Tax Law), or (F) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign law) or any Tax allocation, indemnification or sharing agreement (excluding any commercial agreements entered into in the ordinary course of business and not primarily relating to Taxes) or request any Tax ruling or Tax holiday;
(xvii) fail to keep in a manner consistent force insurance policies or replacement or revised provisions regarding insurance coverage with past practicerespect to the material assets, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, operations and (z) do not include an admission of liability or fault on the part activities of the Company or any Company Subsidiaryand its Subsidiaries as currently in effect;
(xviii) materially reduce enter into any new lease of real property involving payments of more than $200,000 in the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancelaggregate per year, or permit to lapse amend the terms of any material Company Registered IPexisting lease of real property that would require payments over the remaining term of such lease in excess of $200,000 per year, other than in its reasonable business judgment or in the ordinary course renewals of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business existing leases in the ordinary course of business. Parent agrees that, during ;
(xix) except as required by the period from terms of any Company Benefit Plan as in effect on the date of this Agreement through the earlier or as described in Section 6.01(a)(xix) of the Closing or the termination of this AgreementCompany Disclosure Letter, except (A) increase the compensation or benefits payable or to become payable to any of its directors, officers, employees or individual independent contractors (except for annual merit increases in base salary of employees who are not officers in the extent Ordinary Course of Business by no more than 10% per individual and not to exceed 4.0% in the Company shall otherwise give its prior consent in writingaggregate), (B) as set forth grant to any of its directors, officers, employees or individual independent contractors any increase in Section 4.1(b) of the Parent Disclosure Scheduleseverance or termination pay, (C) as may be required by applicable Legal Requirementspay or award, or commit to pay or award, any bonuses or incentive compensation, (D) as expressly permitted enter into any employment, consulting, severance, retention or required by this Agreementtermination agreement (including, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either for the avoidance of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) splitdoubt, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or propertyoffer letters) with respect to any shares of Parent’s capital stock its directors, officers, employees or the capital stock or other equity interest of any Parent Subsidiaryindividual independent contractors, other than dividends offer letters that do not provide any severance, retention, change in control or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent equity award commitments with new non-executive employee hires, and new contractor or another wholly owned Parent Subsidiary;
(iv) acquire (by mergerconsultant engagements, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), permitted under clause (CH) or clause (I) hereof or in connection with any business or division promotions of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory existing employees in the ordinary course Ordinary Course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessBus
Appears in 1 contract
Sources: Merger Agreement
Interim Operations. 1
Except as otherwise expressly contemplated by this Agreement or as set forth in Section 5.01 of the Company Disclosure Schedule or as agreed to in writing by Parent (a) The which shall not be unreasonably withheld or delayed, other than with respect to subsections 5.01(c), 5.01(d), 5.01(g), and 5.01(h), in which case such consent shall be given in Parent’s sole discretion), the Company covenants and agrees that, that during the period from the date of this Agreement through to the earlier of the Closing Effective Time (or the until termination of this Agreement, except Agreement in accordance with Article 7 hereof):
(1a) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) business and operations of the Company Disclosure Schedule, and the Subsidiaries shall be conducted in the ordinary course of business consistent with past practice;
(3b) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries each Subsidiary to, (i) maintain its existence in good standing under applicable Law, and (ii) use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give preserve intact its prior consent in writing (in the case of subsections (iv)assets, (vi)properties, (viii)contracts or other legally binding understandings, (ix), (x), (xii), (xiii), licenses and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed)business organizations, (B) as set forth in Section 4.1(akeep available the services of its current officers and key employees and (C) preserve the current relationships of the Company Disclosure Scheduleand the Subsidiaries with payors, customers, suppliers, distributors, lessors, licensors, licensees, creditors, employees, contractors and other Persons with which the Company or any Subsidiary has business relations;
(Cc) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend authorize for issuance, issue, deliver, propose, sell or agree or commit to issue, sell or deliver (whether through the Company’s Organizational Documents issuance or amend granting of options, commitments, subscriptions, rights to purchase or otherwise), pledge or otherwise encumber any shares of its capital stock or the Organizational Documents capital stock of any Company Subsidiary;
, any other securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, securities or convertible securities or any other securities or equity equivalents (including, without limitation, stock appreciation rights or phantom interests), except for issuances of Common Stock upon the exercise of Options or Warrants outstanding as of the date hereof, (ii) splitrepurchase, combineredeem or otherwise acquire, subdivideor permit any Subsidiary to repurchase, changeredeem or otherwise acquire, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Subsidiary (including, without limitation, securities exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, capital stock or other equity interests of the Company or any Subsidiary), (iii) sell, transfer or pledge, or agree to sell, transfer or pledge, any equity interest owned by it in any Subsidiary, (iv) amend or otherwise change its certificate of incorporation or bylaws or permit any Subsidiary to amend its certificate of incorporation, bylaws or equivalent organizational documents or (v) adjust, split, combine or reclassify any shares of its capital stock, or permit any Subsidiary to adjust, split, combine or reclassify any shares of its capital stock, except in the case of (ii) for purchases, redemptions or other acquisitions of capital stock or other equity interest required by the terms of the applicable Stock Plan;
(iiid) the Company shall not, and shall not permit any Subsidiary to (i) declare, set aside, make establish a record date for, or pay any dividend or other distribution dividends on (whether payable in cash, stock or other property) with ), or make any other distributions in respect of, any of its capital stock (except for dividends paid by direct or indirect wholly owned Subsidiaries to any shares of the Company’s capital stock ), (ii) acquire or agree to acquire, including, without limitation, by merging or consolidating with, or purchasing the assets or capital stock or other equity interest interests of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or (iii) authorize or make any monthly capital expenditures in excess of any Company Subsidiary, $100,000 in the aggregate (other than dividends or distributions only pursuant to commitments prior to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiarydate hereof);
(ive) acquire the Company shall not, and shall not permit any Subsidiary to, except as expressly contemplated by this Agreement (by mergerincluding, consolidationwithout limitation, operation of lawSection 2.03 hereof) (i) increase or agree to increase in any manner the compensation or benefits of, acquisition of stockor pay any bonus to, other equity interests any current or assetsformer director, formation of a joint venture officer or otherwise) employee except (A) any other Personfor increases and bonuses expressly contemplated by or required under existing employment agreements or bonus plans, and (B) any equity interest for increases in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies compensation to non-director and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets non-officer employees in the ordinary course of business consistent with past practice; , (Bii) pursuant to written Contracts or commitments existing as of become obligated under any Benefit Plan that was not in existence on the date of this Agreement; hereof or (C) as security for amend, modify or terminate any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers Benefit Plan or other third parties benefit or compensation plan, program, agreement or arrangement or any agreement, arrangement, plan or policy for the benefit of any current or former director, officer or employee in existence on the date hereof, excluding for this purpose any amendment or modification as may be necessary to comply with, or to avoid the imposition of penalties or excise taxes to the Company, any Subsidiary, or any Benefit Plan participant, under applicable Law, (iii) hire any new employees other than non-officer employees in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or (iv) terminate any other securities officer or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former key employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: good reason or for reasonable cause or (1v) amendments to Company Plans determined by the Company in good faith to except as may be required to comply with applicable Legal Requirements; (2) hiring Law, pay any Person for employment (including benefit not required by means any plan or arrangement as in effect as of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreementhereof (including, andwithout limitation, notwithstanding anything to the contrary in this Section 4.1(a)(ix)securities exchangeable for, provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation options, warrants, calls, commitments or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term rights of any Material Contract) any Material Contract or (B) waivekind to acquire, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company or any Subsidiary);
(f) the Company shall not, and shall not permit any Subsidiary to, sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of (including through any voting trustsale-leaseback or similar transaction), any of its properties or assets other than with respect (i) pursuant to awards under existing contracts and commitments, (ii) properties or assets (or portions of properties or assets) not material to the operation of the business of the Company Equity Plans otherwise permitted under this Agreement or and/or any Subsidiary with a fair market value less than $50,000, (iii) inventory in connection the ordinary course of business consistent with past practice, (iv) licenses granted by the granting Company in the ordinary course of revocable proxies in connection with any meeting business to customers for such customers’ use of the Company’s shareholdersproducts and services, and (v) Permitted Liens;
(xvig) adopt a plan the Company shall not, and shall not permit any Subsidiary to, (i) incur, assume or pre-pay any indebtedness for borrowed money or enter into any agreement to incur, assume or pre-pay any indebtedness for borrowed money, or guarantee, or agree to guarantee, any such indebtedness or obligation of (A) complete another Person, or partial liquidation issue or sell, or agree to issue or sell, any debt securities or options, warrants or calls or rights to acquire any debt securities of the Company or any Subsidiary, guarantee any debt securities of others, 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, (ii) make or forgive any loans, advances or capital contributions to, guarantees for the benefit of, or investments in, any Person, other than loans between or among the Company and any wholly owned Subsidiary and cash advances to the Company’s or any Subsidiary’s employees for reimbursable travel and other business expenses incurred in the ordinary course of business consistent with past practice or (Biii) assume, guarantee or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except for the obligations of the Subsidiaries permitted under this Agreement;
(h) the Company shall not, and shall not permit any Subsidiary to, adopt or put into effect a plan of complete or partial liquidation, dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, reorganization of the Company or any Subsidiary (other than, in the case of clause (Bthan any transaction specifically contemplated by this Agreement or as permitted by Section 5.09), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xviii) settle the Company shall not, and shall not permit any Subsidiary to, (i) enter into, or compromise materially amend, modify, supplement or terminate any litigationMaterial Contract or Lease, claim(ii) enter into, suitor amend, action modify, supplement or proceedingterminate any contract that if so entered into, except for settlements modified, amended or compromises other than terminated could be reasonably likely to (A) have a Company Material Adverse Effect, (B) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (C) prevent or materially delay the consummation of the Transactions, or (iii) waive, release, grant, assign, transfer or fail to enforce any of its material rights or claims (whether such rights or claims arise under a Material Contract or otherwise);
(j) the Company shall, and shall cause the Subsidiaries to, (i) comply in all material respects with their obligations under the Material Contracts as such obligations become due, (ii) maintain insurance covering risks of such types and in such amounts as are consistent with the Company’s past practices and (iii) use commercially reasonable efforts not to permit any insurance policy naming it as beneficiary or loss payable payee to be canceled or terminated;
(k) the Company shall not, and shall not permit any Subsidiary to, (i) pay, discharge, settle or satisfy any liabilities in excess of $100,000 (individually or in the aggregate), other than the payment, discharge or satisfaction, satisfaction of liabilities in the ordinary course of business in a manner consistent with past practice, as required by any applicable Law or as required by the terms of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on contract of the Company or any Company Subsidiary (other than confidentiality obligations)the Subsidiaries, (yii) involve engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of the payment Company or other Person covered by Item 404 of money greater than $100,000 Regulation S-K promulgated under the Exchange Act that would be required to be disclosed under such Item 404, (iii) compromise or settle any Action directly relating to or affecting the Company or the Subsidiaries having a value or in an amount in excess of existing insurance coverage$250,000, (iv) effectuate a “plant closing” or “mass layoff,” as those terms are defined in the Worker Adjustment and Retraining Notification Act (z) do not include an admission WARN), affecting in whole or in part any site of liability employment, facility, operating unit or fault on the part employee of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect , or (Bv) terminate abandon or allow to lapse or expire any registration or application for material Company PermitsIP Rights;
(xxl) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheldnot, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
, (i) amend Parent’s or either change any of the Acquisition Subs’ Organizational Documents accounting policies, practices or amend procedures (including tax accounting policies, practices and procedures) used by the Organizational Documents Company or any Subsidiary as of any Parent Subsidiary the date hereof, except as may be required as a result of a change in any manner that would be adverse applicable Law or in GAAP, (ii) revalue in any material manner any of its assets (including, without limitation, writing down or writing off any notes or accounts receivable in any manner), except as required by GAAP or (iii) make or change any Tax election, make or change any method of accounting with respect to Taxes except as may be required as a result of applicable Law, settle or compromise any Tax liability in excess of $250,000 (individually or in the holders aggregate) or file any amended Tax Return that would increase the Tax liability of the Company Common Stock or any Subsidiary after the Effective Time; and
(after giving effect m) the Company shall not, and shall not permit any Subsidiary to, agree or commit to do any of the foregoing. Notwithstanding anything to the Mergers) contrary set forth herein, it is understood and agreed that none of Parent, Merger Sub or materially delay their affiliates have the right to control or materially impair direct the ability of Parent Company’s operations prior to consummate the Mergers;
(ii) splitEffective Time. Prior to the Effective Time, combinethe Company shall exercise, subdivide, change, exchange, amend consistent with the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Companythis Agreement, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company complete control and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesssupervision over its operations.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during From and after the period from the date execution and delivery of this Agreement through until the earlier of the Closing or Effective Time and the termination of this AgreementAgreement and abandonment of the transactions contemplated by this Agreement pursuant to Article IX, except (1i) to the extent Parent shall as otherwise give its prior consent in writing (such consent not to be unreasonably withheldrequired, conditioned contemplated or delayed)permitted by this Agreement or as required by a Governmental Entity or applicable Law, (2ii) as set forth in Section 4.1(a7.1(a) of the Company Disclosure Schedule, Schedule or (3iii) as may Parent shall otherwise consent in writing (which consent shall not be required by applicable Legal Requirementsunreasonably withheld, delayed or (4) as expressly required by this Agreementconditioned), the Company (A) shall, and shall cause the Company its Subsidiaries to, use commercially reasonable efforts to conduct its business their respective businesses in the ordinary course Ordinary Course of business; provided that any action expressly permitted by Business in all material respects, (B) shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to (x) maintain all existing relationships and goodwill with key customers, suppliers and other persons having material business relationships with the remaining provisions Company and its Subsidiaries and (y) keep available the services of this Section 4.1(a) (including Section 4.1(a) the officers and key employees of the Company Disclosure Scheduleand its Subsidiaries, and (C) will not constitute a violation without limiting the generality of the foregoing. During , shall not, and shall cause its Subsidiaries not to:
(i) adopt or propose any change in its Organizational Documents;
(ii) merge or consolidate with any other Person, except for any such transactions solely among Wholly Owned Subsidiaries of the period Company,
(iii) adopt or enter into a plan of restructuring, reorganizing, dissolving, recapitalizing, complete or partial liquidation or similar transaction;
(iv) enter into any agreements or arrangements imposing material changes or restrictions on its properties, assets, operations or businesses;
(v) acquire or agree to acquire by merger, consolidation, acquisition of stock, equity or assets or otherwise, any business, Person, division, properties or assets from any -52- other Person, other than purchases or acquisitions of assets in the Ordinary Course of Business with a fair market value or purchase price not in excess of $1 million in any individual transaction or $2 million in the aggregate;
(vi) transfer, sell, lease, sublease, license, pledge, mortgage, assign, divest, cancel or otherwise dispose of, or incur, permit or suffer to exist the creation of any Encumbrance (other than any Permitted Encumbrance) upon any properties or assets (excluding Intellectual Property Rights) material to the Company, except in connection with (A) sales of obsolete assets or (B) sales, leases, licenses or other dispositions of assets, in each case with a fair market value (as reasonably determined by the Company) not in excess of $500,000 in any individual transaction or $1 million in the aggregate;
(vii) issue, deliver, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, Encumber or otherwise enter into any Contract or understanding with respect to the voting of or transfer any shares of capital stock of the Company or capital stock or other equity or equity-based interests of any of its Subsidiaries, securities convertible or exchangeable into or exercisable for any such shares of capital stock or other equity interests, or any options, warrants or other rights of any kind to acquire any such shares of capital stock, other equity interests or such convertible or exchangeable securities (other than (A) the delivery of any Common Shares upon (1) the conversion of either the Preferred Shares (including in respect of dividends accumulated on the Preferred Shares) in accordance with the terms of the Preferred Shares or (2) the conversion of the Company Notes in accordance with the Indenture and the exercise of the Capped Call Transactions in accordance with the Capped Call Confirmations (B) the issuance of Preferred Shares in connection with the payment of dividends on the Preferred Shares in accordance with the terms of the Preferred Shares or (B) the issuance of shares of such capital stock, other equity securities or convertible or exchangeable securities (1) by a Wholly Owned Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of the Company, (2) in respect of Company Equity Awards outstanding as of the date of this Agreement through in accordance with their terms and, as applicable, the earlier Stock Plans in effect as of the Closing Capitalization Time or the termination of this Agreement, except (A3) pursuant to the extent Parent shall otherwise give ESPP in accordance with its prior consent in writing (in the case of subsections (ivterms and subject to Section 4.3(g), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(iiviii) splitmake any loans, combineadvances, subdivide, change, exchange, amend guarantees or capital contributions to or investments in any Person in excess of $200,000 in the terms of or reclassify any shares of the Company’s capital stock or aggregate (other equity interests of than between the Company or and any Company Subsidiaryof its Wholly Owned Subsidiaries in the Ordinary Course of Business);
(iiiix) declare, set aside, establish a record date for accrue, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise with respect to any shares of the Company’s capital stock or the its capital stock or other equity interest interests (and for the avoidance of any doubt, excluding the Company SubsidiaryNotes) of the Company or its Subsidiaries, other than except for (A) dividends or distributions only to the extent paid by any wholly owned Company Wholly Owned Subsidiary to the Company or another wholly owned to any other Wholly Owned Subsidiary of the Company Subsidiaryor (B) dividends payable to the holders of Preferred Shares, payable in cash or Preferred Shares, in accordance with the terms of the Preferred Shares;
(ivx) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire (by mergeror offer to do any of the foregoing), consolidationdirectly or indirectly, operation any of law, acquisition of its capital stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales the withholding of inventory, goods or services in Common Shares to satisfy the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as payment of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to exercise price on the exercise of repurchase rights existing prior to the date of this Agreement; a Company Option or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with Tax obligations upon the exercise, vesting or settlement of Company OptionsEquity Awards outstanding as of the date of this Agreement, as applicablein each case, in accordance with their terms and, as -53- applicable, the terms Stock Plans as in effect as of the applicable awardCapitalization Time and (B) pursuant to an exercise of the Capped Call Transactions in accordance with their terms;
(viiixi) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel assume any indebtedness for borrowed money, guarantee any such indebtedness, issue indebtedness for borrowed money or sell any debt securities enter into a “keep well” or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, similar arrangement in respect of indebtedness for borrowed money except for any such indebtedness among not to exceed $2.5 million individually or $5 million in the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)aggregate;
(ixxii) (A) adoptincur, terminate make or amend authorize any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of accrual or commitment for, capital expenditures, or any member obligations or liabilities in connection therewith except as contemplated by or reasonably related to, and which shall not exceed 107.5% of the Company Boardaggregate amounts set forth in, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions capital budget set forth in Section 4.1(a)(ix7.1(a)(xii) of the Company Disclosure Schedule;
(xxiii) except in the ordinary course of businessenter into, (i)(A) terminate or materially amend or terminate (except for terminations any Contract pursuant to which the expiration of the existing term of any Material Contract) any Material Contract Company or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
Subsidiaries purchase from a third party service provider Software (xii“Third Party IT Contracts”) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course Ordinary Course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due Business with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other such Contract that involve aggregate annual payments of less than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice$300,000);
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Agreement and Plan of Merger (Voya Financial, Inc.)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) hereof and prior to the extent Effective Time (unless Parent shall otherwise give its prior consent approve in writing (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned)), (2) and except as otherwise expressly contemplated by this Agreement or required by applicable Laws or as set forth in on Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and its Subsidiaries shall cause the Company business of it and its Subsidiaries to, use commercially reasonable efforts to conduct its business be conducted in the ordinary course of business; provided that any action expressly permitted by consistent with past practice and it and its Subsidiaries shall use their respective reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates. Without limiting the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation generality of the foregoing. During the period , and in furtherance thereof, from the date of this Agreement through until the earlier of the Closing or the termination of this AgreementEffective Time, except (A) to the extent as otherwise expressly contemplated or specifically permitted by this Agreement, (B) as Parent shall otherwise give its prior consent may approve in writing (in the case of such approval not to be unreasonably withheld, delayed or conditioned (other than with respect to subsections (i), (ii), (iii), (iv), (vi), (viiivii), (ixviii), (x), (xiixiii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayedxiv), (Bxvi), (xviii), (xix), (xx), (xxi), (xxii) (collectively, the “specified operating covenants”) or (xxiii) (but solely in the case of subsection (xxiii), with respect to the specified operating covenants), in which cases (involving the specified operating covenants) Parent may withhold its consent in its sole discretion)), (C) as required by applicable Law or any Governmental Entity or (D) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend adopt any change in the Company’s Organizational Documents certificate of incorporation or amend bylaws or other applicable governing instruments of the Organizational Documents Company or any of any Company Subsidiaryits Subsidiaries;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person;
(iii) other than capital expenditures, combinewhich shall be subject to subparagraph (ix) of this Section 6.1(a), subdividemake any acquisition of all or substantially all of the capital stock or assets of any other Person, changewhether by way of stock purchase, exchangeasset purchase, amend merger or otherwise (any such transaction, an “Acquisition”), with a value or purchase price in the terms aggregate in excess of $10 million in any transaction or reclassify series of related transactions (and the Company shall provide reasonable advance notice to Parent of the consummation of any Acquisition with a value or purchase price in excess of $10 million), or make more than three Acquisitions in the aggregate, other than Acquisitions pursuant to Contracts in effect as of the date of this Agreement, copies of which have been provided to Parent or made available on the Company Data Site prior to the date hereof; (“Company Data Site,” as used in this Agreement, means the on-line data room established by the Company with Intralinks, Inc., by which the Company provided access to documents and materials to Parent and Merger Sub in connection with the transactions contemplated by this Agreement);
(iv) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than (A) the issuance of Shares upon the settlement of RSUs under the Stock Plan (and dividend equivalents thereon, if applicable) in accordance with the terms of the Stock Plan or (B) the issuance of shares by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company);
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Subsidiary of the Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company SubsidiarySubsidiary of the Company) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) acquire (by mergerreclassify, consolidationsplit, operation combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of law, acquisition its capital stock or securities convertible or exchangeable into or exercisable for any shares of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person its capital stock (other than investments the acquisition of any Shares tendered by current or former employees or directors in equity securities that constitute short term investments that are accounted for as cash equivalentsorder to pay Taxes in connection with the settlement of RSUs and other awards under the Stock Plan);
(viii) enter into any Contracts relating to interest rate protection, or incur, issue, modify, renew, syndicate or refinance any Indebtedness (other than (i) any letters of credit issued in the ordinary course of business, (Cii) the refinancing of any business or division existing Indebtedness of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses provided that any such refinancing Indebtedness so incurred must be voluntarily prepayable without premium, penalties or other grants or assignments costs in excess of Intellectual Property $500,000 in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
aggregate) and (viii) except in connection with any transaction between the Company swap agreements and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets collar agreements entered into in the ordinary course of business consistent with past practice);
(ix) except for reasonable expenditures related to operational emergencies that are not in excess of $1 million individually or $2.5 million in the aggregate, make or authorize any capital expenditures in excess of $6 million in the aggregate; provided, that in the case of any expenditures related to operational emergencies, Parent will respond to any request for consent hereunder within 24 hours of receiving such request;
(Bx) pursuant make any material changes with respect to written Contracts financial or commitments existing Tax accounting policies or procedures, except as required by applicable Law or by changes in GAAP;
(xi) settle any litigation or other proceedings before a Governmental Entity (other than with respect to any Tax audits, litigation or proceedings) for an amount in excess of $3 million individually or $10 million in the aggregate;
(xii) except to the extent required by Law, make any material Tax election;
(xiii) enter into any settlement, compromise or closing agreement with respect to any material Tax liability or Tax refund or file any amended Tax Return with respect to any material Tax;
(xiv) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material amount of assets, product lines or businesses of the date Company or its Subsidiaries, including capital stock of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or of its Subsidiaries, other third parties than sales of inventory and parts in the ordinary course of business in a manner consistent with past practice;
practice or pursuant to Contracts in force on the date of this Agreement, transactions solely among the Company and/or its wholly-owned Subsidiaries that would not result in any increase (viiother than a de minimis increase) directly or indirectly repurchase, redeem or otherwise acquire any shares of in the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants Tax liability of the Company and its Subsidiaries or pursuant to the exercise of repurchase rights existing Contracts in effect prior to the date of this Agreement; , copies of which have been provided or (B) shares of Company Common Stock accepted as payment for made available to Parent prior to the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable awarddate hereof;
(viiixv) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights except as required pursuant to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions a Benefit Plan in effect prior to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this AgreementAgreement or as otherwise required by applicable Law, and(A) grant or provide any severance or termination payments or benefits to Service Providers of the Company Group except for new hires, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; , (4B) increases in increase the compensation or benefits required pursuant to any Company Plan Service Provider in effect on excess, in the aggregate, of 3.75% of the current aggregate compensation of Service Providers as of the date hereof; hereof (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts provided that are any such increase is in the ordinary course of business in a manner consistent with past practice; and ), (6C) any other actions set forth than, with respect to medical or dental Benefit Plans, as would not reasonably be expected, individually or in Section 4.1(a)(ix) of the aggregate, to result in material expense or liability to the Company Disclosure Schedule;
or any of its Subsidiaries, establish, adopt, terminate or materially amend any Benefit Plan or any plan, program, arrangement, policy or agreement that would be a Benefit Plan if it were in existence on the date hereof or (xD) except grant any equity or equity-based awards; provided, that the Company may issue (i) RSUs in respect of not more than 200,000 Shares in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or business consistent with past practice and (ii) enter into any Contract or agreement that, if in effect additional RSUs on a contingent basis such that the date issuance of such additional RSUs is subject to the termination of this Agreement, would constitute ; it being understood and agreed that the Company or a Material Contract;
(xi) change any Subsidiary of its methods the Company may make offers of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made employment to newly hired non-executive employees in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement business consistent with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in past practice that are not inconsistent with the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date terms of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
subsection (xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan or agreement of (A) complete or partial liquidation or dissolution of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company its Subsidiaries;
(xvii) settle or compromise grant any litigation, claim, suit, action or proceeding, except for settlements or compromises Lien other than (A) the payment, discharge or satisfaction, Permitted Liens and except in the ordinary course of business in a manner consistent connection with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligationsIndebtedness permitted under Section 6.1(a)(viii), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce in the amount case of insurance coverage Subsidiaries of the Company which are organized in jurisdictions other than a state of the United States, make any investment in debt or fail to renew equity securities issued by the Company or maintain any material existing insurance policiesof its Subsidiaries organized under the laws of a state of the United States;
(xix) (A) amend permit any Company Permits of its Subsidiaries or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, any non-U.S. official, in a manner that adversely impacts each case, in violation of the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company PermitsFCPA;
(xx) (A) fail adopt or implement any stockholder rights plan or amend the Rights Plan, in each case, in any manner adverse to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP Parent or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practiceMerger Sub;
(xxi) take unless such action is permitted by Section 6.2, waive, release, fail to enforce, or cause consent to any material matter with respect to which its consent is required under, any material confidentiality, standstill or similar agreement to which the Company or any of its Subsidiaries is a party;
(xxii) enter into, amend, waive or terminate any transaction that would be required to be taken disclosed pursuant to Section 5.1(r) if entered into at any action, time after the Applicable Date and prior to or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent on the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfieddate hereof; or
(xxiixxiii) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees thatshall not knowingly take or permit any of its Affiliates to take any action that would reasonably be expected to adversely affect, during prevent or delay in any material respect the period from the date of this Agreement through the earlier consummation of the Closing or the termination of this Agreement, except Merger.
(1c) to the extent If the Company shall otherwise give obtains actual knowledge of any activities of the Company or any of its prior consent in writing (such consent not Subsidiaries, including those activities of their respective directors, officers, managers, employees, independent contractors, representatives or agents, that the Company reasonably believes to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) violation of the Parent Disclosure ScheduleFCPA, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent the Company shall, and shall cause the Parent each of its Subsidiaries to use their reasonable best efforts to, cease such activities. The Company shall, and shall cause its Subsidiaries to use commercially their reasonable best efforts to, take all actions required by law to conduct remediate any actions taken by the Company or its business Subsidiaries, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier violation of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessFCPA.
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through until the earlier Effective Time (unless Parent shall otherwise approve in writing and except as otherwise expressly contemplated by this Agreement and except as required by applicable Laws), the business of it and its Subsidiaries shall be conducted in the ordinary and usual course consistent with past practice and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates. Without limiting the generality of the Closing foregoing and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as otherwise contemplated or the termination of required by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent not to be unreasonably withheld, conditioned or delayed)writing, (2C) as required by applicable Laws or any Governmental Entity or (D) as set forth in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shallwill not, and shall cause will not permit its Subsidiaries, to:
(i) adopt or propose any change in its certificate of incorporation or By-laws or other applicable governing instruments;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person, use commercially reasonable efforts to conduct except for any such transactions among wholly owned Subsidiaries of the Company, or restructure, reorganize or completely or partially liquidate the Company or any of its business in Subsidiaries;
(iii) acquire assets outside of the ordinary course of business; provided that business from any action expressly permitted by other Person with a value or purchase price in the remaining provisions aggregate in excess of $1 million in any transaction or series of related transactions, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement and set forth in Section 4.1(a) (including Section 4.1(a6.1(a)(iii) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company SubsidiaryLetter;
(iiiv) splitissue, combinesell, subdividepledge, changedispose of, exchangegrant, amend transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any its Subsidiaries (other than (A) the issuance of Shares upon the exercise of Company SubsidiaryOptions, the settlement of Restricted Share and conversion of the Convertible Notes (and dividend equivalents thereon, if applicable) in each case which Company Options, Restricted Share or Convertible Notes were outstanding as of the date hereof or (B) the issuance of shares of capital stock by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible, exchangeable or exercisable securities;
(iiiv) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company) in excess of $1 million in the aggregate;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any direct or indirect wholly owned Subsidiary of the Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company SubsidiarySubsidiary of the Company) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, other than the acquisition of stock, other equity interests any Shares tendered by current or assets, formation former employees or directors in order to pay Taxes in connection with the exercise of a joint venture Company Options or otherwisethe settlement of Restricted Share in accordance with the terms of the applicable plan);
(viii) (A) incur any other Person, (B) any equity interest in any other indebtedness for borrowed money or guarantee such indebtedness of another Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsa wholly owned Subsidiary of the Company), (C) or issue or sell any business debt securities or division warrants or other rights to acquire any debt security of another Person, or (D) any material assets except, (1) acquisitions by the Company from or any wholly owned Company Subsidiary or among any wholly owned Company of its Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property except for indebtedness for borrowed money incurred in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(vix) except as set forth in connection with any transaction between the capital budgets set forth in Section 6.1(a)(ix) of the Company and Disclosure Letter, make or authorize any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares capital expenditure in excess of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options$1 million in the aggregate;
(vix) except in connection make any material changes with any transaction between the Company and any wholly owned Company Subsidiary respect to accounting policies or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsprocedures, except for Company Permitted Encumbrancesas required by changes in GAAP or applicable Law;
(xi) compromise, settle or otherwise dispose of agree to settle any suit, action, claim, proceeding or investigation (by mergerincluding any suit, consolidationaction, operation of lawclaim, division proceeding or investigation relating to this Agreement or the transactions contemplated hereby) or pay, discharge or satisfy or agree to pay, discharge or satisfy any claim, liability or obligation (absolute or accrued, asserted or unasserted, contingent or otherwise)) other than the compromise, any material Company IP settlement, payment, discharge or material tangible assets satisfaction of the Companyclaims, other than: (A) sales of inventory, goods liabilities or services obligations in the ordinary course of business in a manner consistent with past practice which in any event does not exceed in any individual case $500,000 or an aggregate of obsolete equipment more than $2 million;
(xii) other than in the ordinary course of business and consistent with past practice, make or change any material Tax election or settle or compromise any material Tax liability and except as are not, individually or in the aggregate, material to the business or the Company and its Subsidiaries, taken as a whole, except as required by Law, change any of its material methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income tax returns for the taxable year ended June 30, 2005;
(xiii) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any assets, product lines or businesses of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, in each case which are material to the Company and its Subsidiaries taken as a whole, other than inventory, supplies and other assets in the ordinary course of business and other than pursuant to Contracts in effect prior to the date of this Agreement and set forth in Section 6.1(a)(xiii) of the Company Disclosure Letter;
(xiv) except as required pursuant to Contracts in effect prior to the date of this Agreement, or as otherwise required by applicable Laws, (A) grant or provide any severance or termination payments or benefits to or increase the compensation or make any new equity awards to any director, officer or other employee of the Company or any of its Subsidiaries, except for increases of non-equity compensation to non-director and non-officer employees in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exerciseestablish, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or materially amend any Company Benefit Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than routine changes to welfare plans for cause2007); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into change in any agreement, understanding or arrangement with material respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;its debt collection practices; or
(xvi) adopt a plan of (A) complete agree, authorize or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that commit to do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees thatshall not knowingly take or permit any of its Subsidiaries to take any action that is reasonably likely to prevent or, during solely in connection with the period from acquisition of an interest in an Internet marketing services business, delay in a material respect the date of this Agreement through the earlier consummation of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessMerger.
Appears in 1 contract
Sources: Merger Agreement (Vertrue Inc)
Interim Operations. 1
(a) The Except (i) as described in Section 5.1(a) of the Company Disclosure Letter, (ii) as otherwise expressly required or permitted by this Agreement or any other Transaction Document, including for the avoidance of doubt, the steps reasonably required to consummate the Company Reorganization, (iii) as required by or reasonably responsive to applicable Law (including COVID-19 Measures) or any Governmental Entity, or (iv) as SVF shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through the earlier of until the Closing or valid termination of this Agreement, the Company shall use its reasonable best efforts to operate the business of it and its Subsidiaries in the ordinary course consistent with past practice and to preserve their business organizations intact and maintain existing relations with all of the Company’s key customers, suppliers, creditors and employees; provided, however, that no action taken or failed to be taken by the Company or any of its Subsidiaries with respect to the matters specifically addressed by clauses (i) through (xx) of Section 5.1(b) shall be deemed a breach of this Section 5.1(a) unless such action would constitute a breach of such clauses (i) through (xx).
(b) Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the Closing or valid termination of this Agreement, except (1w) as described in the corresponding subsection of Section 5.1(b) of the Company Disclosure Letter, (x) as otherwise expressly required or permitted by this Agreement or any other Transaction Document, including, for the avoidance of doubt, the Company Reorganization, (y) as required by or reasonably responsive to the extent Parent applicable Law (including COVID-19 Measures) or any Governmental Entity or (z) as SVF shall otherwise give its prior consent to in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed), the Company shall not and shall not permit its Subsidiaries to:
(2i) as set forth adopt or propose any change in Section 4.1(aits or its Subsidiaries’ Organizational Documents;
(ii) merge or consolidate itself or any of its Subsidiaries with any other Person, except for any such transactions solely between or among the Company and/or any of its Wholly Owned Subsidiaries, or restructure, reorganize, dissolve or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on substantially all of its assets, operations or businesses;
(iii) acquire assets outside of the Company Disclosure Scheduleordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $2,000,000 or acquire any business or Person, (3) as may be required by applicable Legal Requirementsmerger or consolidation, purchase of substantially all assets or equity interests or by any other manner, in each case, in any transaction or a series of related transactions, or (4) as expressly required by this Agreemententer into any joint venture or similar long-term business combination with another Person, other than acquisitions or other transactions pursuant to Contracts to which the Company shall, and shall cause or any of its Subsidiaries are a party that are in effect as of the date of this Agreement or entered into thereafter consistent with the terms hereof;
(iv) other than pursuant to Contracts to which the Company or any of its Subsidiaries toare a party that are in effect as of the date of this Agreement or entered into thereafter consistent with the terms hereof, use commercially reasonable efforts transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to conduct lapse or expire or otherwise dispose of any of its business material assets, properties, licenses, operations, rights, product lines, businesses or interests therein, except for (A) transfers, sales, licenses or other dispositions in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), business consistent with past practice and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth sales, leases, licenses or other dispositions of assets with a fair market value not in Section 4.1(a) excess of $5,000,000 in the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryaggregate;
(iiv) splitissue, combinesell, subdividepledge, changedispose of, exchangegrant, amend transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than the issuance of shares by a Wholly Owned Subsidiary of the Company Subsidiaryto the Company or another Wholly Owned Subsidiary of the Company), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock;
(iiivi) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
(vii) declare, set aside, make or pay any dividend or other distribution (whether other than any Tax Distribution, as defined by the Company LLC Agreement), payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock stock, or the capital stock or other equity interest of enter into any Company Subsidiary, other than dividends or distributions only agreement with respect to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting of its capital stock;
(ivviii) acquire (by mergermake any material loans, consolidationadvances, operation of law, acquisition of stock, other equity interests guarantees or assets, formation of a joint venture capital contributions to or otherwise) (A) any other Person, (B) any equity interest investments in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or any Wholly Owned Subsidiary of the Company), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property than in the ordinary course of business;
1 Note (ix) incur any indebtedness for borrowed money or guarantee any such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to W&S: Subject to ongoing review by the Company.
(v) except in connection with acquire any transaction between debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice; , not to exceed $2,000,000 in the aggregate;
(x) make or commit to make capital expenditures other than in an amount not in excess of the amount set forth in Section 5.1(b)(x) of the Company Disclosure Letter, except for any such expenditures (A) to the extent reasonably necessary to avoid a material business interruption as a result of any act of God, war, terrorism, earthquake, fire, hurricane, storm, flood, civil disturbance, explosion, partial or entire failure of utilities or information technology systems, or any other similar cause not reasonably within the control of the Company or its Subsidiaries or (B) pursuant not in excess of $5,000,000 in the aggregate during any consecutive twelve-month period;
(xi) other than with respect to written Contracts with a supplier or commitments existing as customer of the date of this Agreement; Company or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties otherwise in the ordinary course of business in business, enter into any Contract that would have been a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) Material Contract had it been entered into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; provided that the Company will reasonably consult with SVF before entering into any such Contract with any supplier or customer of the Company if the contemplated counterparty to such Contract is not a current supplier or customer, or an Affiliate of a current supplier or customer, of the Company;
(Bxii) shares amend, modify, fail to renew or terminate any Company Material Contract or waive or release any material rights, claims or benefits under any Company Material Contracts, other than expirations or non-renewals of Company Common Stock accepted any such Contract in the ordinary course of business;
(xiii) make any material changes with respect to its accounting policies or procedures, except as payment for required by changes in Law or GAAP;
(xiv) other than with respect to any Proceeding in connection with, arising out of or otherwise related to a dispute among the exercise price of Company Options or for withholding Taxes incurred Parties in connection with this Agreement or any of the exerciseTransaction Documents, vesting settle any Proceeding, except where such settlement is covered by insurance or settlement involves only the payment of monetary damages directly from the Company Optionsin an amount not more than $1,000,000 in the aggregate;
(xv) make any material Tax election in a manner inconsistent with past practice or revoke or change any material Tax election; file any material amended Tax Return; adopt or change any material Tax accounting method or period; enter into any agreement with a Taxing authority with respect to material Taxes; settle or compromise any examination, audit or other action with a Taxing authority of or relating to any material Taxes; extend, waive or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes; surrender any right to claim a refund in respect of material Taxes; or enter into any “closing agreement” as applicable, described in accordance Section 7121 of the Code (or any similar Law) with any Taxing authority;
(xvi) except as required pursuant to the terms of any Company Benefit Plan as in effect on the applicable award;
(viii) incur (other than draws on existing revolving loans)date of this Agreement or as required by Law, redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend increase in any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, manner the compensation or benefits of any member of the Company Boardconsulting fees, current employeebonus, pension, welfare, fringe or former employee of the Company or any Company Subsidiaryother benefits, (C) grant any rights to severance, retention, change in control severance or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment Employee (including by means executive officers) with an annual salary or wage rate or consulting fees and target annual cash bonus opportunity in excess of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after $300,000 as of the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(xB) except in the ordinary course of business, (i)(A) amend consistent with past practice, become a party to, establish, adopt, amend, commence participation in or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under Company Benefit Plan or any Material Contracts, or (ii) enter arrangement that would have been a Company Benefit Plan had it been entered into any Contract or agreement that, if in effect on the date of prior to this Agreement, would constitute a Material Contract;
(xiC) change grant any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claimnew awards, or other proceeding relating to a material amount amend or modify the terms of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, outstanding awards or, other than except in the ordinary course of business, agree consistent with past practice, under any Company Benefit Plan, (D) take any action to an extension accelerate the vesting or waiver lapsing of restrictions or payment, or fund or in any other way secure the statute payment, of limitations with respect to a material amount of Taxes;
compensation or benefits under any Company Benefit Plan, (xiiiE) forgive any loans or issue any loans (other than consignment of Company Products routine travel advances issued in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or to any Company Subsidiary may make Employee, (F) hire any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by employee or engage any independent contractor (who is a natural person) with annual salary or wage rate or consulting fees and target annual cash bonus opportunity in excess of $300,000 or (G) terminate the Company and the Company Subsidiaries since the date employment of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders executive officer other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiariesfor cause;
(xvii) settle sell, assign, lease, license, pledge, encumber, divest, abandon or compromise any litigationotherwise dispose of, claimallow to lapse or expire, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse protect, any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IPIntellectual Property, other than in its reasonable business judgment or in the ordinary course grants of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business non-exclusive licenses in the ordinary course of business. Parent agrees that;
(xviii) become a party to, during establish, adopt, amend, commence participation in or enter into any collective bargaining or other labor union Contract;
(xix) enter into any material new line of business outside of the period from business currently conducted by the Company and its Subsidiaries as of the date of this Agreement through the earlier Agreement; or
(xx) agree, authorize or commit to do any of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through hereof until the earlier of the Closing Date or the termination date, if any, on which this Agreement is terminated pursuant to Section 8.1 (the “Termination Date”), the Seller shall cause the Company and each Subsidiary to (i) conduct the Business only in the Ordinary Course of this AgreementBusiness and (ii) use reasonable best efforts to preserve intact the business organization and goodwill of the Business, to maintain the Company’s and each Subsidiary’s relationships with the Clients, insurance underwriters and other third parties having business dealings with the Company or the Subsidiaries and to keep available the services of the key Business Employees.
(b) In furtherance of, and without limiting the generality of, Section 6.1(a), except (1) to the extent Parent shall otherwise give its prior consent as expressly permitted by this Agreement or as approved in writing by the Purchaser (such consent which approval shall not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through hereof until the earlier of the Closing Date or the termination of this AgreementTermination Date, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of neither the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company nor any Subsidiary shall not (and the Seller shall not permit the Company or any Company Subsidiary to):
(i) amend take or omit to take any action that results or may reasonably be expected to result in any of the Company’s Organizational Documents representations and warranties of the Seller set forth herein being or amend becoming untrue in any material respect or in any of the Organizational Documents of any Company Subsidiaryconditions precedent set forth in Sections 7.1 and 7.3 not being satisfied;
(ii) splitamend or otherwise change the Organizational Documents;
(iii) (A) authorize, combineissue, subdivide, change, exchange, amend the terms of sell or reclassify transfer any shares of the Company’s capital stock Shares or other equity interests securities of the Company or any Company Subsidiary;
, (iiiB) adjust, split, combine, reclassify or redeem any Shares or (C) declare, authorize, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or other property) with in respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiaryShares;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests merge or assets, formation of a joint venture or otherwise) (A) consolidate with any other Person, (B) acquire any equity interest in business or assets of any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)whether by merger, (C) any business or division of another Personstock purchase, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the asset purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants business combination) or assignments of Intellectual Property in the ordinary course of businessform any subsidiary;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary adopt a plan of complete or among any wholly owned Company Subsidiariespartial liquidation, issuedissolution, sellrestructuring, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock recapitalization or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionsreorganization;
(vi) make any material change in the operation of the Business, except in connection such changes as may be required to comply with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practiceApplicable Law;
(vii) directly enter into, amend in any material respect or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any terminate (other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, than in accordance with the terms of the applicable award;
(viiiits terms) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract , or (B) waive, release or assign any material rights under any Material Contractsor claims thereunder;
(viii) sell, lease (as lessor), transfer or otherwise dispose of, or mortgage, encumber, pledge or impose any Lien on, any assets or properties of the Company or any Subsidiary, other than dispositions of immaterial assets or properties in the Ordinary Course of Business for fair value;
(iiix) enter into create, incur, assume or guarantee any Contract Indebtedness, or agreement thatextend or modify any existing Indebtedness;
(x) make any loans, if in effect on the date of this Agreementadvances or capital contributions to, would constitute a Material Contractor investments in, any Person;
(xi) cancel any debts owed to, or waive any claims or rights held by, the Company or any Subsidiary;
(xii) commence, settle or compromise any Action by or against the Company or any Subsidiary, other than settlements entered into in the Ordinary Course of Business that require only the payment of monetary damages in an aggregate amount not to exceed $25,000;
(xiii) (A) institute or announce any increase in the compensation, bonuses or other benefits payable to any Business Employee, (B) enter into or amend any employment, consulting, deferred compensation, severance or change of control agreement with any Business Employee, or (C) enter into, adopt or amend any Employee Benefit Plan;
(xiv) engage in any transaction with any Affiliates, except transactions that are at prices and on terms and conditions not less favorable to the Company or the Subsidiaries than could be obtained on an arm’s-length basis from unrelated third parties;
(xv) change any of its methods of financial accounting methods, policies or accounting practices in any material respect procedures, other than as required by changes in Applicable Law or GAAP;
(xiixvi) make fail to pay any accounts payable when due (except for elections made other than amounts being contested in the ordinary course of business), change good faith) or revoke fail to use commercially reasonable efforts to collect any material Tax election, change accounts receivable when due;
(xvii) take any Tax accounting period action that is intended or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityany of the conditions of the Closing set forth in Article 7 not being satisfied, settle or compromise any material liability for Taxes or any Tax auditexcept, claimin every case, or other proceeding relating to a material amount of Taxes, as may be required by Applicable Law; or
(xviii) enter into any agreement, commitment or understanding (whether written or oral) with respect to any of the foregoing.
(c) From the date hereof until the Closing Date, neither the Company nor any Subsidiary shall make, rescind, or change any election with respect to Taxes; change any Tax accounting period; adopt or change any method of Tax accounting; file any amended Tax Return; enter into an agreement with a Governmental Entity relating respect to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from with any Governmental Entity, Authority (including a “closing agreement” under Code section 7121); surrender any right to claim a material refund of for Taxes, or, other than in the ordinary course of business, agree ; consent to an extension or waiver of the statute of limitations with respect applicable to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company Tax claim or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements assessment; or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) take any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any similar action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Stock Purchase Agreement (First Financial Holdings Inc /De/)
Interim Operations. 1
(a) The Company agrees and Parent, each covenant and agree as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Effective Time (unless Parent or the termination of this AgreementCompany, except (1) to the extent Parent as applicable, shall otherwise give its prior consent approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed)), its business and its Subsidiaries’ businesses shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of its and its Subsidiaries’ present officers, employees and agents, except as (i) otherwise expressly contemplated or required by this Agreement, (2ii) as required by applicable Law or (iii) set forth in on Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3) as may be required by applicable Legal Requirementsit relates to the Company and its Subsidiaries, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this on Section 4.1(a) (including Section 4.1(a6.1(a) of the Company Parent Disclosure Schedule) will not constitute a violation Letter, as it relates to Parent and its Subsidiaries. Without limiting the generality of and in furtherance of the foregoing. During the period , from the date of this Agreement through until the earlier of the Closing Effective Time, except as (A) expressly contemplated or the termination of required by this Agreement, except (AB) to the extent Parent shall otherwise give its prior consent required by applicable Law, (C) required by any Benefit Plan or collective bargaining agreement, (D) as approved in writing by the Company or Parent (in the case of subsections as applicable) (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned or delayed, in the case of Parent’s approval, with respect to Section 6.1(a)(iv), (Bvi), (x), (xi), (xii), (xvi), (xvii), (xiv), (xx) as or (xxi), and in the case of the Company’s approval, with respect to Section 6.1(a)(iv), (vi), (vii), (x), (xi), (xii), (xix), (xx) or (xxi)) or (E) set forth in on Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (C) as may be required by applicable Legal Requirementsit relates to the Company and its Subsidiaries, or (Don Section 6.1(a) of the Parent Disclosure Letter, as expressly required by this Agreementit relates to Parent and its Subsidiaries, the Company shall each Party, on its own account, will not (and shall will cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend its certificate or articles of incorporation or bylaws or comparable governing documents other than amendments that solely effect ministerial changes to such documents and that would not adversely affect the Company’s Organizational Documents consummation of the Merger or amend the Organizational Documents of any Company Subsidiaryother transactions contemplated by this Agreement;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock stock, property or propertya combination thereof) with respect to any shares of the Company’s capital stock or the its capital stock or other equity interest of any Company Subsidiary, interests (other than dividends or distributions only to the extent paid by any a wholly owned Company Subsidiary of such Party to the Company such Party or another wholly owned Company SubsidiarySubsidiary of such Party);
(iii) except for any transactions among or solely involving a Party’s wholly owned Subsidiaries or among wholly owned Subsidiaries of a Party’s Subsidiaries, merge or consolidate itself or any of its Subsidiaries with any other Person, or restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its material assets, operations or businesses;
(iv) acquire (assets or businesses, whether by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture purchase or otherwise) (A) any other Person, (B) any equity interest in from any other Person (with a fair market value or purchase price, in the case of the Company, in excess of $2,000,000 individually or $10,000,000 in the aggregate or, in the case of Parent, in excess of $6,000,000 individually or $30,000,000 in the aggregate, in any transaction or series of related transactions, other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)acquisitions of goods, (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, services and supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant pledge, dispose of, grant, transfer, encumber, or otherwise permit to become outstanding any additional shares authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, or securities convertible otherwise enter into any Contract or exchangeable for, or options, warrants or rights understanding with respect to acquirethe voting of, any shares of its capital stock (or equity interests) or of any of its Subsidiaries (other than in respect of equity-based awards outstanding as of the date of this Agreement, in each case in accordance with their terms and the plan documents), or securities convertible or exchangeable into or exercisable for any shares of such capital stock (or equity interests), or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(vi) create or incur any encumbrance on any assets of such Party or any of its Subsidiaries, other than Permitted Liens or encumbrances incurred in connection with the incurrence of Indebtedness to the extent permitted under Section 6.1(a)(x);
(vii) make any loans, advances, guarantees or capital contributions to or investments in any Person, except, in the case of Parent, any such transaction not to exceed $3,000,000 individually or $15,000,000 in the aggregate;
(viii) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock (or equity interests) or securities convertible or exchangeable into or exercisable for any shares of its capital stock (or equity interests), other than with respect to (A) the capital stock or other equity interestsinterests of a wholly owned Subsidiary of the Company or Parent, other than as applicable, (B) the acquisition of shares of Company Common Stock issuable upon or Parent Ordinary Shares by the Company or Parent, respectively, that are tendered by holders of equity-based awards to satisfy the obligations to pay the exercise price or Tax withholding obligations with respect to such awards, and (C) the acquisition by the Company or Parent of outstanding Company Optionsequity-based awards in connection with the forfeiture of such awards;
(viix) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third partylease, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, divest or otherwise dispose of (of, whether by merger, consolidation, operation of law, division sale or otherwise), any material Company IP assets, business or material tangible assets a division of any business with a value in the case of the Company, in excess of $2,000,000 individually or $10,000,000 in the aggregate or, in the case of Parent, in excess of $6,000,000 individually or $30,000,000 in the aggregate, in each case other than: (A) than sales of inventory, goods inventory or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; ;
(Bx) pursuant to written Contracts incur, assume, guarantee or commitments existing as otherwise become liable for, prepay, redeem or defease any Indebtedness (including the issuance of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers debt securities, warrants or other third parties rights to acquire any debt security), except for (A) in the case of Parent, Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $30,000,000 individually or $50,000,000 in a manner the aggregate, (B) Indebtedness in replacement of existing Indebtedness for borrowed money on terms substantially consistent with past practice;
or more favorable to Parent than the Indebtedness being replaced, (viiC) directly guarantees of Indebtedness of its wholly owned Subsidiaries otherwise incurred in compliance with this Section 6.1(a)(x) or indirectly repurchase(D) Indebtedness incurred by Parent owed to any of its wholly owned Subsidiaries or by any of Parent’s wholly owned Subsidiaries and owed to Parent or any of its wholly owned Subsidiaries, redeem or otherwise acquire by the Company owed to any shares of its wholly owned Subsidiaries or by any of the Company’s wholly owned Subsidiaries and owed to the Company or any Company Subsidiary’s of its wholly owned Subsidiaries;
(xi) make or authorize any payment of, or accrual or commitment for, capital stock expenditures in excess of $12,000,000, in the case of the Company, or equity interests$45,000,000, in the case of Parent, except (A) any such expenditure to the extent reasonably necessary to avoid a material business interruption as a result of any act of God, war, terrorism, earthquake, fire, hurricane, storm, flood, civil disturbance, explosion, partial or entire failure of utilities or information technology systems, or any other securities similar cause not reasonably within the control of such Party or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interestsits Subsidiaries, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares expenditures that the Company or Parent reasonably determines are necessary to maintain the safety and integrity of any asset or property in response to any unanticipated and subsequently discovered events, occurrences or developments (provided that the Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company OptionsParent, as applicable, in accordance will use its reasonable best efforts to consult with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, Party prior to making or cancel any indebtedness for borrowed money, guarantee agreeing to any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereofexpenditure);
(ixxii) (A) adopt, terminate enter into any Contract or amend other arrangement (other than any Company Plan except Contract that is expressly permitted or contemplated to the extent permitted be entered into by clauses (B), (C), (Dthis Agreement) or (E) of that would have been a Material Contract had it been entered into prior to this Section 4.1(a)(ix)Agreement, (B) increasematerially amend, modify, supplement, waive, terminate, assign, convey or otherwise transfer, in whole or in part, any Material Contract, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant forgive, compromise, cancel, modify or waive any debts or claims held by it or waive any rights to severancehaving in each case of this clause (C) a value in excess of, retention, change in control or termination pay to any member the case of the Company BoardCompany, current employee $1,000,000 individually or former employee of $5,000,000 in the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptaggregate or, in each casethe case of Parent, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President $3,000,000 individually or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President $15,000,000 in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleaggregate;
(xxiii) except enter into or modify any Contract relating to, or otherwise enter into, modify, implement or consummate, a Related Party Transaction;
(xiv) other than in the ordinary course of business, (i)(A) amend settle any action, suit, claim, hearing, arbitration, investigation or terminate (except other proceedings for terminations pursuant to an amount, in the expiration case of the existing term Company, in excess of $1,000,000 individually or $5,000,000 in the aggregate or, in the case of Parent, in excess of $3,000,000 individually or $15,000,000 in the aggregate, or any obligation or liability of it in excess of such amount or on a basis that would result in the imposition of any Material Contract) writ, judgment, decree, settlement, award, injunction or similar order of any Material Contract Governmental Entity that would restrict in a material respect the future activity or (B) waive, release conduct of such Party or assign any material rights under of its Subsidiaries or involve the admission of any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contractcriminal liability;
(xixv) change make any of its methods of changes with respect to financial accounting policies or accounting practices in any material respect other than procedures, except as required by changes in GAAPGAAP or IFRS, as applicable, or any interpretation thereof, including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization, or Law, including pursuant to SEC or AMF rule or policy;
(xiixvi) make (except for elections made other than in the ordinary course of business), make, change or revoke any material Tax election, adopt or change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment accounting method, file any material amended Tax Return, take any action which would reasonably be expected to cause the Parent to be treated as a “domestic corporation” pursuant to Section 7874(b) of the Code as a result in of the Merger, take any action which would reasonably be expected to cause the Company to be treated as an “expatriated entity” within the meaning of Section 7874(a)(2) of the Code as a material Tax liabilityresult of the Merger, settle or compromise any material liability for Taxes or any Tax claim, audit, claimassessment or dispute for an amount materially in excess of the amount reserved or accrued on such Party’s most recent consolidated balance sheet included in such Party’s Reports, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiiixvii) other than consignment of in accordance with the terms and regular expiration thereof, terminate or permit any material Company Products Permit (in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) case of the Company Disclosure Schedule Company) or Parent Permit (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed case of Parent) to lapse or fail to apply on a timely basis (subject to any cure periods) for any renewal of any renewable material Company Permit (in the aggregate CapEx Budget by more than $100,000case of the Company) or Parent Permit (in the case of Parent);
(xivxviii) other than on account of changes in the insurance industry generally in the United States or France, make or agree to any material changes to be made to any insurance policies so as to materially affect the insurance coverage of the Party or its Subsidiaries or assets following the Effective Time;
(xix) enter into, terminate, adopt or amend any employment, change in control or severance agreement or any other Benefit Plan or collective bargaining agreement, except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene for (A) any special meeting amendment to any Benefit Plan (excluding employment, change in control, severance or similar agreement with any individual officer, director or employee) that does not increase the cost of such plan or the Company’s shareholders other than the Company Shareholder Meeting benefits provided thereunder to such Party or its Subsidiaries, or (B) any other meeting actions permitted to be taken by clause (xx) below without the consent of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebyapplicable Party;
(xvxx) enter into any agreement, understanding or arrangement with respect to in the voting of any capital stock or other equity interests case of the Company and its Subsidiaries, (including A) increase or change the compensation or benefits payable to any voting trustEmployees (other than executive officers), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement salary or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
wage increases for Employees (xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (Aexecutive officers) the payment, discharge or satisfaction, in the ordinary course of business in a manner and consistent with past practicepractice which, of liabilities reflected or reserved against in the Most Recent aggregate, do not exceed the previous year’s aggregate compensation for all Employees (other than executive officers) by more than 3%, (B) increase or change the compensation or benefits payable to any Employees who are executive officers, (C) pay or grant, or commit to pay or grant any bonus or incentive compensation, (D) grant or accelerate the vesting of any equity-based awards or other compensation or amend or modify the terms of any such outstanding awards, under any Company Balance SheetBenefit Plan, except as provided in this Agreement, (E) grant any transaction or retention bonuses or any discretionary bonus (including bonus plans that exist as of the date hereof), (F) pay annual bonuses or performance bonuses, other than for completed periods based on actual performance through the end of the applicable performance period, or if the Company is contractually obligated to in connection with a termination of employment, (G) increase or change the severance terms applicable to any Employee, (H) terminate the employment or services of any Employee that is more senior than a Senior Vice President, other than for cause, or (BI) those that do not (x) impose hire any injunctive relief on the Company officer, employee, independent contractor or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money consultant who has target annual compensation greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice200,000;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent in the Merger from qualifying as a reorganization within the meaning of Section 368(a) case of the Code Company and its Subsidiaries, implement any store closures or (B) result in any mass layoff of the conditions to the Mergers set forth in ARTICLE V not being satisfiedemployees; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any new line of business outside of the actions described in clauses (i) through (xxi) existing businesses of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give a Party and its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees thatExcept (i) as required by applicable Law, (ii) as otherwise expressly contemplated by this Agreement or (iii) as set forth in Schedule 6.01(b), (iv) as required by any Governing Documents of such entities or (v) as consented to in writing by HESM (which consent shall not be unreasonably withheld, delayed or conditioned), during the period from the date of this Agreement through until the earlier of the Closing Effective Time or the termination of this Agreementhereof, except each HIP Entity shall (1A) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate use commercially reasonable efforts to maintain and preserve intact its business organization and the vesting or payment of, the compensation or benefits goodwill of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiarythose having business relationships with it, (C) grant any rights use commercially reasonable efforts to severancekeep in full force and effect all material Permits and all material insurance policies maintained by the HIP Entities, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments changes to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan policies made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, and (i)(AD) amend or terminate (except for terminations pursuant use commercially reasonable efforts to comply in all material respects with all applicable Laws and the expiration requirements of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any all Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees thatWithout limiting the generality of the foregoing, during the period from the date of this Agreement through until the earlier of the Closing Effective Time or the termination of this Agreementhereof, except (1A) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed)as required by applicable Law, (2B) as otherwise expressly contemplated by this Agreement or the other Transaction Documents or (C) as set forth in Section 4.1(b) Schedule 6.01(b), none of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent HIP Entities shall, and shall cause without the Parent Subsidiaries toprior written consent of HESM (which consent will not be unreasonably withheld, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing delayed or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary toconditioned):
(i) amend Parent’s adopt or either propose any change to any of the Acquisition Subs’ their Organizational Documents or amend as in effect on the Organizational Documents date of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergersthis Agreement;
(ii) splitissue, combinesell, subdividepledge, changedispose of, exchangegrant, amend transfer, encumber, or authorize the terms issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any equity securities of the HIP Entities, or reclassify securities convertible or exchangeable into or exercisable for any shares of Parent’s such capital stock stock, or any options, warrants or other rights of any kind to acquire any equity interests of the Company, except for any securities or such transaction involving only wholly owned Parent Subsidiariesconvertible or exchangeable securities or interests;
(iii) declare, set aside, make aside or pay any dividend or other distribution (whether payable distributions in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiaryof their equity securities or split, combine or reclassify any of their equity securities, other than dividends or cash distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiarytheir respective equity holders in accordance with their respective Organizational Documents;
(iv) acquire (by mergersettle, consolidationpropose to settle or compromise any action before a Governmental Authority if such settlement, operation of law, acquisition of stock, other equity interests proposed settlement or assets, formation of a joint venture or otherwise) compromise (A) with respect to the payment of monetary damages, involves the payment of monetary damages that exceed $1,000,000 in the aggregate (together with all other settlements or compromises after the date of this Agreement), net of any other Personamounts covered by insurance that the HIP Entities expect to be promptly paid by the applicable insurer, (B) that imposes any material equitable or non-monetary relief, penalty or restriction on any HIP Entity or (C) that would reasonably be expected to affect the rights or defenses available to any HIP Entity in any related or similar claims that, individually or in the aggregate, are material to the HIP Entities, taken as a whole;
(v) recommend, propose, announce, adopt or vote to adopt a plan of complete or partial dissolution or liquidation, in each case, that would (A) prevent or materially impede or delay the ability of the Parties to satisfy any of the conditions to, or the consummation of, the transactions set forth in this Agreement or (B) adversely affect in a material way the rights of holders of the securities of any Party;
(vi) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel or abandon or otherwise dispose of any of the HIP Entities’ material assets, product lines or businesses, including any equity interest interests of any of the HIP Entities, except (A) in connection with goods or services provided in the ordinary course of business and sales of obsolete assets, or (B) for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $1,000,000 in the aggregate;
(vii) except (w) as set forth in Schedule 6.01(b)(vii), (x) transactions solely between or among the HIP Entities and/or the HESM Entities that will not result in any other Person (obligation or liability to any party other than investments the HIP Entities and/or the HESM Entities, (y) borrowings permitted under the HIP Credit Agreement or (z) in equity securities that constitute short term investments that are accounted connection with the Financing Transactions, (A) incur, assume or guarantee any indebtedness for as cash equivalents)borrowed money, (B) issue, assume or guarantee any debt securities, (C) grant any business option, warrant or division of another Personright to purchase any debt securities, or (D) issue any assets securities convertible into or exchangeable for any debt securities of others, other than any such actions contemplated in (A) through (D), as would not, taken together, result in the incurrence or guarantee of indebtedness or issuance of debt securities with a value in excess of $1,000,000 in the aggregate;
(viii) make any change to any of their accounting policies or procedures, except as required by changes after the date hereof in accordance with GAAP;
(ix) (A) change any material method of Tax accounting, (B) make, change or revoke any material Tax election, (C) settle or compromise any material liability for Taxes, (D) file any materially amended Tax Return, (E) enter into any written agreement with any Governmental Authority with respect to Taxes, (F) surrender any right to claim a refund for Taxes, (G) consent to an extension of the statute of limitations applicable to any Tax claim or assessment, or (H) take any action or fail to take any action that would reasonably be expected to cause any HIP Entity (other than HIP Holdings and ▇▇▇▇ Infrastructure Partners Finance Corporation) to be treated, for U.S. federal income Tax purposes, as a corporation; or
(x) agree, authorize or commit to do any of the foregoing.
(c) From the date of this Agreement until the Closing Date, each of HESM Entities and HIP Parties shall promptly notify the other Parties in writing of (i) any event, condition or circumstance that could reasonably be expected to result in any of the conditions set forth in Article V not being satisfied at the Effective Time, and (ii) any material breach by the notifying Party of any covenant, obligation or agreement contained in this Agreement; provided, however, that the delivery of any notice pursuant to this Section 6.01(c) shall not limit or otherwise affect the remedies available hereunder to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessnotified Party.
Appears in 1 contract
Sources: Partnership Restructuring Agreement (Hess Midstream Partners LP)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except Except (1) to the extent as required by applicable Law, (2) as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), (23) for commercially reasonable actions as required to comply with COVID-19 Measures, (4) as set forth expressly disclosed in Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Letter or (45) as expressly required by provided for in this Agreement, the Company shallcovenants and agrees as to itself and its Subsidiaries that, from and shall cause after the execution of this Agreement and prior to the earlier of (x) the Effective Time or (y) termination of this Agreement in accordance with Article VIII (A) the Company Subsidiaries to, shall use its commercially reasonable efforts to conduct its business in and the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets Subsidiaries in the ordinary course of business consistent with past practice; provided, however that no action that is specifically permitted by any of subclauses (a) through (n) of Section 6.1(B) shall be deemed a breach of either this clause (A) or any other subclause of Section 6.1(B)) and (B) without limiting the generality of, and in furtherance of, the foregoing the Company shall not and will not permit any of its Subsidiaries to:
(a) (i) amend, supplement or otherwise modify its certificate of incorporation or bylaws (or comparable governing documents), other than amendments to the governing documents of any wholly owned Subsidiary of the Company that would not prevent, materially delay or materially impair the Merger or the other transactions contemplated by this Agreement, (ii) split, combine, subdivide or reclassify its outstanding equity interests (except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction), (iii) declare, set aside or pay any dividend or distribution payable in cash, stock or property (or any combination thereof) in respect of any of its equity interests (except for any dividends or distributions paid by a direct or indirect wholly owned Subsidiary of the Company to another direct or indirect wholly owned Subsidiary of the Company or to the Company) or (iv) purchase, repurchase, redeem or otherwise acquire any of its equity interests or any securities convertible or exchangeable into or exercisable for any of its equity interests (other than (1) pursuant to written Contracts the exercise of Company Options or commitments existing the forfeiture of, or withholding of Taxes with respect to, Company Options, Restricted Stock Units or Performance Restricted Stock Units or (2) purchases, repurchases, redemptions or other acquisitions of securities of any wholly owned Subsidiary of the Company by the Company or any other wholly owned Subsidiary of the Company);
(b) merge or consolidate with any other Person, or restructure, reorganize or completely or partially liquidate (other than mergers among, or the restructuring, reorganization or liquidation of any wholly owned Subsidiaries of the Company that would not prevent, materially delay or materially impair the Merger or the other transactions contemplated by this Agreement) or create any Subsidiary of the Company or any of its Subsidiaries;
(c) (i) increase in any material respect the compensation or benefits payable to any current or former director, officer, employee, consultant or other service provider with an annual salary in excess of $250,000, other than increases in base salary for promotions or as a result of salary reviews made in the ordinary course of business and consistent with past practices, (ii) grant any extraordinary bonus or any equity compensation to any current or former director, officer, employee, consultant or other service provider, (iii) establish, adopt or enter into, other than in the ordinary course of business in accordance with past practice, any new bonus, pension, other retirement, deferred compensation, equity compensation, change in control, retention or other benefit agreement, plan or arrangement or other Company Plan (including any Contract that would be a Company Plan if it were in existence as of the date of this Agreement; ) for the benefit of any current or former director, officer, employee, consultant or other individual service provider or (Civ) as security for make any borrowings permitted by Section 4.1(a)(viii); change to any Company Plan that would materially increase the costs to the Company in respect of such Company Plan;
(d) incur any Indebtedness, guarantee, endorse, assume or otherwise become liable or responsible (Ddirectly or indirectly) licenses granted any Indebtedness of another Person or issue any rights to customers or other third parties acquire any Indebtedness, except (i) in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchasebusiness, redeem or otherwise acquire any shares of borrowings under the Company’s or any Company Subsidiary’s capital stock or equity interestsrevolving credit facility as in effect as of the date hereof, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of including pursuant to the Company’s Existing Credit Agreement, (ii) in replacement of existing Indebtedness which has matured or any Company Subsidiary’s capital stock or equity interestsis scheduled to mature, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to in each case after the date of this Agreement; , on then prevailing market terms or on terms substantially consistent with or more beneficial to the Company and its Subsidiaries, taken as a whole, than the Indebtedness being replaced, (Biii) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness inter-company Indebtedness among the Company and its wholly owned Subsidiaries, (iv) (A) to the extent not drawn upon and payments are not triggered thereby, letters of credit, bank guarantees, security or performance bonds or similar credit support instruments and (B) overdraft facilities or cash management programs, in each case issued, made or entered into in the ordinary course of business consistent with past practice or (v) hedging in compliance with the hedging strategy of the Company Subsidiaries as of the date of this Agreement in the ordinary course of business consistent with past practice and not for speculative purposes;
(e) make or commit to any capital expenditures other than in the ordinary course of business consistent with past practice and which do not exceed, in the aggregate, for the period between the date hereof and the Effective Date, 110% of the capital expenditures provided for in the 2022 budget previously provided to Parent;
(f) other than sales of inventory in the ordinary course of business consistent with past practice, transfer, lease, license, sell, assign, mortgage, pledge, encumber, place a Lien upon or otherwise dispose of any properties, rights or assets (including equity interests of any of its Subsidiaries), with a fair market value in excess of $5,000,000 individually or $20,000,000 in the aggregate (other than transactions among any the Company and its wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereofSubsidiaries);
(ixg) (A) adoptissue, terminate deliver, sell, grant, transfer, assign, pledge or amend any Company Plan except encumber, agree or commit to or authorize the extent permitted by clauses (B)issuance, (C)delivery, (D) sale, grant, transfer, assignment, pledge or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment encumbrance of, the compensation or benefits any shares of any member of the Company Board, current employee, or former employee of the Company its capital stock or any Company Subsidiary, (C) grant any rights to severance, retention, change other equity interest in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 or any securities convertible or exchangeable into or exercisable for, or any options, warrants or other rights to acquire, any such shares or equity interest, except (other than i) for cause); except, in each case, for: (1) amendments any Shares issued pursuant to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after Options, Restricted Stock Units and Performance Restricted Stock Units outstanding on the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment Agreement in accordance with the Company’s present hiring plan made available existing terms of such awards and the Company Stock Plans as of the date hereof and (ii) by wholly owned Subsidiaries to Parent the Company or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) wholly owned Subsidiary of the Company Disclosure ScheduleCompany;
(xh) except other than in the ordinary course of business, spend or commit to spend in excess of $5,000,000 individually or $20,000,000 in the aggregate to acquire any business or to acquire assets or other property, whether by merger, consolidation, purchase of property or assets or otherwise (i)(Avaluing any non-cash consideration at fair market value as of the date of the agreement for such acquisition);
(i) make any material change with respect to its financial accounting policies or procedures, except as required by changes in GAAP (or any authoritative interpretation thereof) or by applicable Law;
(j) abandon any material existing lines of business or enter into any material new line of business other than any line of business that is reasonably ancillary to and a reasonably foreseeable extension of any line of business as of the date of this Agreement;
(k) other than in the ordinary course of business consistent with past practice, make any loans, advances or capital contributions to, or investments in, any Person (other than loans, advances or capital contributions to the Company or any direct or indirect wholly owned Subsidiary of the Company);
(l) (i) amend or modify in any material respect or terminate (except for excluding terminations pursuant to the upon expiration of the existing term of any Material Contractthereof in accordance with the terms thereof) any Material Contract or (B) waive, release or assign any material rights rights, claims or benefits under any Material Contracts, Contract or (ii) enter into any Contract or agreement that, if in effect on that would have been a Material Contract had it been entered into prior to the date of this AgreementAgreement unless it is on terms substantially consistent with, would constitute or on terms more favorable to the Company or its Subsidiaries (and to Parent and its Subsidiaries following the Closing) than, either a Contract it is replacing or a form of such Material Contract;
(xiContract made available to Parent prior to the date hereof; provided that the foregoing shall not prohibit or restrict the ability of the Company or its Subsidiaries to take any action described in this Section 6.1(l) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of businessbusiness consistent with past practices with respect to Contracts or Material Contracts; provided, further that for the avoidance of doubt, this Section 6.1(l) shall not prohibit or restrict any Company Plans;
(m) (A) settle any action, suit, case, litigation, claim, hearing, arbitration, investigation or other Proceedings before or threatened to be brought before a Governmental Entity, other than settlements if the amount of any such settlement is not in excess of $1,000,000 individually or $5,000,000 in the aggregate, in each case in excess of amounts available under the Company’s applicable insurance policy, provided that such settlements do not involve any admission of guilt (through a plea or otherwise), non-de minimis injunctive or equitable relief or impose non-de minimis restrictions on the business activities of the Company and its Subsidiaries or Parent and its Subsidiaries, or (B) waive, release, grant or transfer any material claim or right of material value or knowingly consent to the termination of any material claim or right of material value;
(n) other than in the ordinary course of business consistent with past practice, make or change or revoke any material Tax election, make any material change to any annual Tax accounting period, adopt or change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a Returns or file any claims for material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxesrefunds, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material closing agreement, settle any material Tax liabilityclaim, request any Tax ruling from any Governmental Entity, audit or assessment or surrender any right to claim a material refund of TaxesTax refund, or, offset or other than reduction in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of TaxesTax liability;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xvo) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedAffiliate Transaction; or
(xxiip) authorizeagree, approve resolve or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (Covetrus, Inc.)
Interim Operations. 1
(a) The Except (i) as expressly contemplated, required or permitted by this Agreement, (ii) as required by applicable Law, (iii) as approved in writing by Parent (such approval not to be unreasonably withheld, delayed or conditioned), or (iv) as set forth on Section 6.01 of the Company agrees thatDisclosure Schedule, during the period from the date of this Agreement through until the earlier to occur of the Closing or the termination of this Agreement pursuant to Article 8 and the Effective Time, the Company will, and will cause its Subsidiaries to, use its and their commercially reasonable efforts to (A) conduct their businesses in the ordinary course of business in all material respects and (B) preserve intact their business organizations and relationships with customers, suppliers, distributors and other Persons with which it has material business dealings.
(b) Except (A) as expressly contemplated, required or permitted by this Agreement, except (1B) to the extent Parent shall otherwise give its prior consent as required by applicable Law, (C) as approved in writing by Parent (such consent approval not to be unreasonably withheld, conditioned delayed or delayedconditioned), or (2D) as set forth in on Section 4.1(a) 6.01 of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by from the date of this AgreementAgreement until earlier to occur of the termination of this Agreement pursuant to Article 8 and the Effective Time, the Company shallwill not, and shall will cause its Subsidiaries not to:
(i) (x) adopt any change in the certificate of incorporation or bylaws of the Company or (y) adopt any change in the organizational documents of any of the Company’s Subsidiaries, in each case whether by merger consolidation or otherwise;
(ii) merge or consolidate the Company or any of its Subsidiaries towith any other Person, use commercially reasonable efforts or restructure, reorganize, recapitalize or completely or partially liquidate or dissolve or otherwise enter into any agreement or arrangement imposing any material restrictions on the assets, operations or business of the Company or any of its Subsidiaries;
(iii) issue, sell, deliver or agree to conduct commit to issue, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of the Company or any of its Subsidiaries, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, restricted shares, restricted share units, performance share units, stock appreciation rights, phantom stock or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, in each case, other than (A) any such transaction among the Company and its Subsidiaries or among the Company’s wholly owned Subsidiaries in the ordinary course of business or (B) any issuance of Shares pursuant to exercise or settlement of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms;
(iv) make any loans, advances or capital contributions to or investments in any Person (other than to the Company or any of its wholly owned Subsidiaries in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iiiv) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise with respect to any shares of the Company’s capital stock or the its capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting interests;
(ivvi) acquire (by mergerreclassify, consolidationsplit, operation of lawcombine, acquisition of stocksubdivide or redeem, other equity interests or assetsrepurchase, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares acquire or amend the terms of, directly or indirectly, any of its capital stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock or other equity interests, other than shares or voting interest (except for (A) acquisitions of Shares in satisfaction of withholding obligations in respect of Company Common Stock issuable upon Equity Awards to the extent required by such Company Equity Awards, or (B) payment of the exercise price in respect of outstanding Company Options, in the case of this clause (B), outstanding as of the date of this Agreement pursuant to its terms or granted thereafter not in violation of this Agreement);
(vivii) create, incur, assume or guarantee or otherwise become liable for any Indebtedness for borrowed money or issue any debt securities or guarantees of the same or any other Indebtedness, except in connection with any transaction between for (A) guarantees or credit support provided by the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets Subsidiaries of the Company, other than: (A) sales obligations of inventory, goods the Company or services any of its Subsidiaries in the ordinary course of business to the extent such Indebtedness is in a manner consistent with past practice existence on the date of this Agreement, or (B) any Indebtedness solely among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries in the ordinary course of obsolete equipment or assets business;
(viii) other than in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for , enter into any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in Contract that would have been a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) Material Contract had it been entered into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exerciseprovided, vesting or settlement of Company Options, as applicable, in accordance with the terms that no Contract of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwisetype described in Section 5.01(k)(i)(N) or make any loans or capital contributions to any other Person, except for any indebtedness among Section 5.01(k)(i)(O) shall be entered into without the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)prior written consent of Parent;
(ix) other than in the ordinary course of business consistent with past practice, amend, modify or waive in any material respect or terminate any Material Contract in a manner adverse to the Company (other than expirations of any such Contract in accordance with its terms);
(x) make any material changes with respect to financial accounting policies or procedures, except as required by Law or by U.S. GAAP or official interpretations with respect thereto or by any Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization);
(xi) settle any Action for an amount in excess of $75,000 individually or $150,000 in the aggregate other than (A) adoptany settlement or compromise where the amount paid or to be paid by the Company or any of its Subsidiaries is fully covered by insurance coverage or retention amounts maintained by the Company or any of its Subsidiaries and (B) settlements or compromises of any Action for an amount not in excess of the amount, terminate if any, reflected or amend any specifically reserved in the balance sheet (or the notes thereto) of the Company Plan except to included in the extent permitted by Company Reports; provided, that, in the case of each of the foregoing clauses (A) and (B), the settlement or compromise of such Action does not (C), (Dx) impose any material restriction on the business or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee operations of the Company or any of its Subsidiaries (or Parent or any of its Subsidiaries after the Closing) or (y) include any non-monetary or injunctive relief, or the admission of wrongdoing, by the Company Subsidiaryor any of its Subsidiaries or any of their respective officers or directors;
(xii) sell, assign, lease, license, sublicense or otherwise transfer or dispose of, abandon or permit to lapse, fail to take any action necessary to maintain, enforce or protect, or create or incur any Lien (other than Permitted Liens), on any material assets or property (including any Company Intellectual Property and Licensed Intellectual Property) except (A) pursuant to existing contracts or commitments (or refinancings thereof) or (B) in the ordinary course of business consistent with past practice and in no event in an amount exceeding $25,000 individually or $50,000 in the aggregate;
(xiii) except for such actions required by the terms of Benefit Plans as in effect on the date hereof or applicable Law: (A) materially increase the compensation or other benefits payable or provided to any Service Providers other than increases in base salary in the ordinary course of business for Service Providers with base salary of less than $250,000; (B) increase or accelerate or commit to accelerate the funding, payment or vesting of compensation or benefits provided under any Benefit Plan, (C) grant or announce any rights to severancecash, retentionequity or equity-based, change in control of control, severance or termination pay retention award to any member Service Provider; (D) establish, adopt, enter into terminate or amend (x) any Collective Bargaining Agreement or (y) any Benefit Plan (or any plan, program, agreement or arrangement that would be a Benefit Plan if in effect on the date hereof); (E) recognize or certify any labor union, labor organization, works council, or group of employees as the Company Board, current employee or former employee bargaining representative of any employees of the Company or any Company Subsidiary, its Subsidiaries or (DF) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual annualized base salary compensation exceeds $100,000 (250,000, other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2x) hiring any Person for employment (including by means of internal promotion) to replace departed employees or to fill any currently existing Vice President vacancies or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary (y) terminations for “cause” (as determined in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made reasonable discretion); provided, however, that the foregoing clauses (A), (B), (C), and (D) shall not restrict the Company or its Subsidiaries from making available to Parent newly hired employees or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; independent contractors (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change plans, agreements, benefits and compensation arrangements (including cash incentive grants, but excluding any equity-related incentives) that are on substantially the same terms and conditions and have a value that is consistent with the past practice of making compensation and benefits available to newly hired employees or revoke independent contractors in similar positions or for employees or independent contractors with similar levels of responsibility;
(xiv) acquire any material Tax electionbusiness, change assets or capital stock of any Tax accounting period Person or material method division thereof, whether in whole or in part (and whether by purchase of Tax accountingstock, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilitypurchase of assets, settle merger, consolidation or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, orotherwise), other than the acquisition of assets from vendors or suppliers of the Company or any of its Subsidiaries in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into implement or announce any agreement, understanding permanent plant closings or arrangement with respect to permanent facility shutdown that would implicate the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersWARN Act;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code make, change or revoke any income or other material Tax election; (B) result in materially change or amend its methods for reporting income, deductions or accounting for Tax purposes or Tax accounting period, (C) file any material amended Tax Return, (D) settle or compromise any Action relating to any material amount of Taxes, (E) enter into any material closing agreement, (F) enter into any material agreement with a Governmental Authority with respect to Taxes, (G) enter into or change any material Tax sharing, Tax advance pricing, Tax allocation, or Tax indemnification agreement that is binding on the Company or its Subsidiaries, (H) consent to the extension or waiver of the conditions limitation period applicable to the Mergers set forth any material amount of taxes, (I) make a request for a material Tax ruling to any Governmental Authority or (J) surrender any right to claim a material Tax refund, offset, abatement, reduction, deduction, exemption, credit or other reduction in ARTICLE V not being satisfiedliability; or
(xxiixvii) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(bc) Parent agrees that, during the period from Following the date of this Agreement hereof and through the earlier of the Closing or the termination of this AgreementDate, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not agrees to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct keep Parent informed, at regular intervals, regarding its business cash position and current and projected cash burn in the ordinary course accordance with historical practice in keeping its own senior leadership informed of business. such matters, and agrees to use commercially reasonable efforts to notify Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing reasonably promptly and in reasonable detail upon becoming aware that its monthly cash burn has exceeded or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessexceed $4,000,000.
Appears in 1 contract
Sources: Merger Agreement (Eargo, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed)writing, (2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Requirements or (4) as expressly permitted or required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable best efforts to conduct its business in the ordinary course and use reasonable best efforts to maintain and preserve intact its business organization, keep available the services of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of current officers, key employees and key consultants and maintain satisfactory relationships with customers, suppliers and distributors, Governmental Entities and other Persons with whom the Company Disclosure Schedule) will not constitute a violation of or any Company Subsidiary has material business relations. Without limiting the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv)writing, (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (C3) as may be required by applicable Legal Requirements, Requirements or (D4) as expressly permitted or required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiarythe Company;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiarySubsidiary of the Company;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)Person, (C) any business or division of another Personowned by a third party, or (D) any material assets in a single transaction or series of related transactions for an aggregate purchase price in excess of $250,000, except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; Subsidiaries of the Company, (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business; provided that the issuance of any Insurance Contract by any Company Insurance Subsidiary will not be considered the acquisition of a business for purposes of this Section 4.1;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than (A) shares of Company Common Stock issuable upon exercise of Company Options or the vesting or settlement of Company RSUs, in each case outstanding as of the date of this Agreement and in accordance with the terms of the applicable award; (B) pursuant to the Company OptionsESPP in the ordinary course of business and in accordance with the terms thereof and of this Agreement (including Section 4.8 hereof); (C) in connection with the exercise of Company Warrants; and (D) the issuance of the Additional Shares pursuant to Section 2.17 of the INSU Merger Agreement;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrancesencumber, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: than (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practicebusiness; (B) pursuant to written Contracts or commitments existing as of the date of this AgreementAgreement and set forth in Part 4.1(a)(vi) of the Company Disclosure Schedule; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business, including any licenses granted in the operation of the enterprise business in a manner consistent with past practicesolutions line of the Company (the “EBS Business”);
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: except (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights binding on the Company and existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of options to purchase Company Options Common Stock pursuant to the Company Equity Plans or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company OptionsOptions and Company RSUs, as applicable, in accordance with the terms of the applicable awardaward and (C) in connection with the exercise of Company Warrants;
(viii) incur (other than draws on existing revolving loans)A) incur, redeem, repurchase, prepay (other than prepayments of revolving loans)prepay, defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or advances or capital contributions to any other Person, other than in the ordinary course of business or (B) incur any Lien on any of its material property or assets, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)Permitted Encumbrances;
(ix) (A) adopt, terminate or amend in any material respect any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix)Plan, (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Boarddirector, individual independent contractor or current employee, or former employee of the Company or any Company SubsidiarySubsidiary with an annual compensation of $200,000 or above, other than as contemplated by Part 4.1(a)(ix) of the Company Disclosure Schedule, (C) grant any rights to severance, retention, change in control control, transaction or termination pay to any member of the Company Boardcurrent or former director, independent contractor or current employee or former employee of the Company or any Company SubsidiarySubsidiary with an annual compensation of $200,000 or above, (D) hire or promote any employee at or to the level with an annual compensation of Vice President $200,000 or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose with an annual base salary exceeds compensation of $100,000 200,000 or above (other than for cause); except, in each case, for: for (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; , (2) hiring as otherwise expressly contemplated by this Agreement, (3) with respect to the annual renewal process for any Person for employment Company Plan that is not reasonably expected to result in a material cost increase to the Company or any Company Subsidiary, (including by means 4) in connection with any employee hire (i) to replace departing employees with an annual compensation of internal promotionless than $200,000, (ii) to fill any currently existing Vice President open positions as set forth on Part 4.1(a)(ix)(4)(ii) of the Company Disclosure Schedule, (iii) who has already accepted an offer of employment and is set forth on Part 4.1(a)(ix)(4)(iii) of the Company Disclosure Schedule or higher position that becomes vacant after (iv) otherwise in the date ordinary course of this Agreement, and, notwithstanding anything to the contrary business; or (5) for increases in this Section 4.1(a)(ix), provide such Person with compensation and or benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent for any employee with past practice; (4) increases in an annual compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleless than $200,000;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material ContractContract and amendments in the ordinary course of business and except with respect to Reinsurance Agreements) any Material Contract or (B) waive, release or assign any material rights under any Material ContractsContracts (other than any Reinsurance Agreement), or (ii) enter into or renew any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material ContractContract (except for renewals of any existing Material Contract in the ordinary course of business and Contracts entered into or renewed in connection with the EBS Business and except for Reinsurance Agreements), or (iii) enter into any Reinsurance Agreement that does not meet the criteria set forth on Part 4.1(a)(x)(iii) of the Company Disclosure Schedule;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAPGAAP or SAP or as required by applicable Legal Requirements;
(xii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change or adopt any Tax accounting period or material method of Tax accounting, amend any material Tax Company Return if such amendment would reasonably be expected to result in a material Tax liability, file any material Company Return prepared in a manner materially inconsistent with past practice, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes “closing agreement” within the meaning of Section 7121 of the Code (or any similar state, local or non-U.S. Legal Requirement) if such agreement would reasonably be expected to result in a material Tax liabilityliability or have a material impact on Taxes, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) sell, transfer, assign, license, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), or mortgage, encumber or exchange any material Intellectual Property owned, or purported to be owned, by the Company or any Subsidiary of the Company, including, for the avoidance of doubt, any sale, transfer, assignment, license, or other disposition of, or mortgage, encumbrance or exchange of any such material Intellectual Property to or with any Affiliate of the Company (other than consignment of Company Products non-exclusive licenses granted in the ordinary course of business) or modify, amend, cancel, terminate, waive, release or assign any Company IP License or any rights, claims, obligations or benefits thereunder or enter into any Contract that would have been a Company IP License had it been entered into prior to the First Effective Time, in each case, with respect to any nonmaterial Company IP License, except, in each case, in the ordinary course of business and for licenses granted in the connection with the EBS Business;
(xiv) (i) make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiiiPart 4.1(a)(xiv)(i) of the Company Disclosure Schedule or (a “Non-Budgeted Capital Expenditure”)ii) incur any cash expenditures or obligations or liabilities except cash expenditures, except that the Company obligations or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene liabilities incurred (A) any special meeting in the ordinary course of the Company’s shareholders other than the Company Shareholder Meeting business or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of in connection with the transactions contemplated herebyby this Agreement;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersstockholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Subsidiary of the Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) commence, settle or compromise any litigation, claim, suit, action or proceeding, except for (x) ordinary course claims and related Legal Proceedings under or with respect to any Insurance Contract and (y) other settlements or compromises other than that (A) the paymentinvolve solely monetary remedies with a value not in excess of $75,000, discharge with respect to any individual litigation, claim, suit, action or satisfactionmatter, or $250,000 in the ordinary course of business in a manner consistent with past practiceaggregate to be paid by the Company and its Subsidiaries, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief restriction on the Company’s business or the business of the Company or any Company Subsidiary (other than confidentiality obligations)Subsidiaries, (yC) involve do not relate to any litigation, claim, suit, action or proceeding by the payment of money greater than $100,000 Company’s stockholders in excess of existing insurance coverage, connection with this Agreement or the Mergers and (zD) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage under the material commercial insurance policies of the Company and the Company Subsidiaries or fail to use reasonable best efforts to renew or maintain any such material existing insurance policies;
(xix) (A) amend any material Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practicebusiness, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practicebusiness;
(xxi) take except in the ordinary course of business and for Contracts entered into in connection with the EBS Business, enter into any individual Contract under which the Company or cause any Company Subsidiary (A) grants or agrees to be taken grant any actionright to material Company IP, other than non-exclusive licenses, or knowingly fail (B) agrees to take pay any royalties in excess of $150,000 with respect to any Intellectual Property;
(xxii) except as expressly required by applicable Legal Requirements or cause the Company’s Organizational Documents, convene (A) any special meeting of the Company’s stockholders other than the Company Stockholder Meeting or (B) any other meeting of the Company’s stockholders to be taken any action, which action or failure to act consider a proposal that would reasonably be expected to (A) impair, prevent or delay the Merger from qualifying as a reorganization within the meaning of Section 368(a) consummation of the Code transactions contemplated hereby;
(xxiii) enter into any new line of business;
(xxiv) (i) alter or amend in any existing financial, underwriting, claims, claims handling, risk retention, reserving, investment or actuarial practice, guideline or policy or any material assumption underlying an actuarial practice or policy, except as may be required by GAAP, SAP, any Governmental Entity or applicable law or (Bii) result enter into any Contract or commitment with any insurance regulatory authority, in any the case of each of clauses (i) and (ii) other than in the conditions to the Mergers set forth in ARTICLE V not being satisfiedordinary course of business; or
(xxiixxv) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses “(i) )” through “(xxi) xxiv)” of this Section 4.1(a)sentence.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed)writing, (2) as set forth in Section Part 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Requirements or (4) as expressly permitted or required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of businessin all material respects and use reasonable best efforts to maintain and preserve intact its business organization. Parent agrees thatWithout limiting the foregoing, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (Lemonade, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from From and after the date of this Agreement through hereof and prior to the earlier of the Closing or the termination of this Agreement or the consummation of the Merger, the businesses of the Company and its Subsidiaries shall be operated and conducted in the ordinary course, except as otherwise contemplated by this Agreement, except (1) to as set forth in Schedule 7.1 of the extent Company Disclosure Letter, as required by applicable Laws or as Parent shall otherwise give its prior consent in writing (such which consent shall not to be unreasonably withheld, conditioned or delayed). Parent shall not take or permit any of its Subsidiaries (including, for the purpose of this sentence, the Company or its Subsidiaries) to take any action or omit to take any action that is reasonably likely to (2i) as result in any of the conditions of the Merger set forth in Section 4.1(aArticle VIII not being satisfied or (ii) prevent the consummation of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Merger. Without limiting the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation generality of the foregoing. During the period , from and after the date of this Agreement through hereof and prior to the earlier of the Closing or the termination of this Agreement, except (A) to Agreement or the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) consummation of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementMerger, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to):
(i) amend the Company’s Organizational Documents , issue, sell, pledge, grant, transfer, encumber or amend the Organizational Documents otherwise dispose of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company its Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary of its Subsidiaries or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or propertyproperty (or any combination thereof) with respect to any shares of Parent’s capital stock or the its capital stock or other equity interest of any Parent Subsidiary, other than interests (except dividends or other distributions only in cash, stock or property paid by any direct or indirect wholly-owned Subsidiary of the Company to the Company or to any other direct or indirect wholly-owned Subsidiary of the Company).
(b) Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and notwithstanding anything to the contrary contained in this Agreement, no consent of Parent or Merger Sub will be required with respect to any matter set forth in this Agreement to the extent paid by the requirement of such consent would violate any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material applicable Law. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations and the Company operations of its Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business.
Appears in 1 contract
Sources: Merger Agreement (Voltari Corp)
Interim Operations. 1
(a) The Company agrees thatshall, during the period from and shall cause its Subsidiaries to, between the date hereof and the Closing or earlier termination of this Agreement through the earlier of the Closing (except in each case as referred to in Section 7.1(b) or the termination of this Agreement, except (1) to the extent as may be approved by Parent shall otherwise give its prior consent in writing (such consent approval not to be unreasonably withheld, conditioned or delayed)), (1) carry on their respective businesses in the ordinary course of business in all material respects consistent with past practice and (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct maintain and preserve intact in all material respects its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of organization and advantageous business relationships. In addition to, and without limiting the foregoing. During the period from , between the date hereof and the Closing or earlier termination of this Agreement through the earlier of the Closing or the termination of this Agreement, (except (A) in each case as referred to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a7.1(b) of the Company Disclosure Schedule, (C) or as may be required approved by applicable Legal Requirements, or (D) as expressly required by this AgreementParent), the Company shall not (not, and shall cause its Subsidiaries not permit any to (provided only clauses (xxi) and (xxii) below shall apply to actions of the Company Subsidiary toor its Subsidiaries taken with respect to Financial Advisors or prospective Financial Advisors):
(i) amend any provision of the Company’s Organizational Documents or amend the Organizational Constituent Documents of any the Company Subsidiaryother than amendments which are ministerial in nature;
(ii) splitsell, combinepledge, subdividetransfer, changedispose of, exchangeencumber (other than Permitted Encumbrances), amend create, redeem, repurchase, acquire, allot or issue, or grant an option to subscribe for, any Equity Interest in the terms Company or any of its Subsidiaries (except in each case the net share settlement or reclassify any shares issuance of equity interests in respect of Company Equity Awards outstanding as of the Company’s date of this Agreement in accordance with their terms (or, with respect to net share settlement, consistent with past practice) and, as applicable, the Stock Plans as in effect on the date of this Agreement);
(iii) (A) acquire or agree to acquire any Equity Interest in, or make any investments in, any Person, (B) make any loans or advances to any Person or make any capital stock contributions to any Person (other than as between the Company and its Subsidiaries and advances of expenses to employees in the ordinary course of business consistent with past practice);
(iv) merge or consolidate the Company or any of its Subsidiaries with any Person (other equity interests than with any Affiliate of the Company or any of its Subsidiaries), or adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company Subsidiaryor any of its Subsidiaries or establish any Person that would constitute a Subsidiary or Affiliate of the Company;
(iiiv) (A) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of its capital stock (including with respect to the Company’s capital stock or , for the capital stock or other equity interest avoidance of any Company Subsidiarydoubt, other than Shares), except for (x) dividends or distributions only to the extent paid by any wholly owned Subsidiary of the Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) to any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division Subsidiary of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary (y) regular quarterly or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit monthly dividends (as applicable) declared and paid with respect to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets Shares and/or Preferred Shares made in the ordinary course of business consistent with past practice; or (B) pursuant to written Contracts split, combine or commitments existing reclassify any of its capital stock or other equity interests 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 other equity interests (except in each case the issuance of equity interests in respect of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the Stock Plans as in effect on the date of this Agreement);
(vi) except as required pursuant to the terms of any Benefit Plan or as otherwise required by applicable Law, the Company shall not: (A) grant any new long-term incentive or equity-based awards, or amend, modify or waive the terms or conditions of any such outstanding awards under any Benefit Plan; or (B) grant any transaction-related retention bonuses (it being understood the Company may pay a portion of the annual bonus in respect of the 2019 calendar year in the form of cash retention awards consistent with past practice); (C) as security increase the compensation payable to any employee, except for (i) employees who are not executive officers of the Company and (ii) increases implemented in the ordinary course of business consistent with past practice provided that the aggregate base salaries payable to all such employees does not exceed 103% of the previous year’s base salaries payable to all such employees; (D)
(i) terminate the employment of any borrowings permitted by Section 4.1(a)(viiiexecutive officer (other than for cause); , (ii) hire any new employee (except for new employees with an annual salary or wage rate of less than $100,000 annually and who are replacement hires receiving substantially similar terms of employment) or (Diii) licenses granted promote or grant merit increases to customers or other third parties any employees, except in the ordinary course of business in connection with the Company’s annual or quarterly compensation review cycle or as the result of the termination or resignation of any employee; (E) adopt, enter into, terminate or amend any Benefit Plan or program that would be a manner consistent Benefit Plan if adopted or any collective bargaining agreement or other Contract with past practice;
(vii) directly any labor organization or indirectly repurchase, redeem or otherwise acquire any shares other representative of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants make any contribution to any Benefit Plan, other than contributions required by Law or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of such Benefit Plans as in effect on the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Persondate hereof, except with respect to Benefit Plans providing for any indebtedness among health and welfare benefits, the Company may (i) negotiate and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (enter into new contracts and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company extensions of existing contracts with Benefit Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President providers in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation , provided that duration of such contracts or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates extensions do not extend beyond calendar year 2020 and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) take such other actions so long as the aggregate cost of any such Benefit Plan is not materially increased; (F) enter into or amend any employment, services, change in control, severance, deferred compensation, retention or similar Contract with any officer, director, or agreement that, if in effect on employee of the date Company; (G) take any action to accelerate or otherwise change the payment timing of this Agreement, would constitute a Material Contract;
any compensation or benefit under any Benefit Plan; or (xiH) change any of its methods of financial accounting actuarial or accounting practices other assumption used to calculate funding obligations with respect to any Benefit Plan or change the manner in any material respect other than which contributions are made or the basis on which contributions are calculated, except as may be required by changes in GAAP;
(xiivii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change any Tax accounting period method or material method period, file any amended Tax Return, enter into any closing agreement with respect to Taxes, request any Tax ruling, waive or extend the statute of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result limitations in respect of a material Tax liability, amount of Taxes or settle or compromise any material Tax liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, refund;
(viii) other than the sale of obsolete equipment or assets in the ordinary course of business, sell, lease, license or otherwise dispose of (whether by way of merger, consolidation, sale of stock or assets, or otherwise), grant an Encumbrance on or permit an Encumbrance to exist on, or agree to sell, lease, license, or otherwise dispose of, or grant or permit an extension Encumbrance on, any properties or waiver assets of the statute Company or any of limitations its Subsidiaries, in each case, other than any Permitted Encumbrances and other than with respect to any assets with a material amount value of Taxesless than $500,000 individually or $2,000,000 in the aggregate;
(ix) acquire or agree to acquire all or a substantial portion of the assets or business of any Person or any division or line of business thereof;
(x) commence any Action or file any petition in any court relating to the bankruptcy, reorganization, insolvency, dissolution, liquidation or relief from debtors, in any case, in respect of the Company or any of its Subsidiaries;
(xi) amend, modify, waive or terminate, in each case, any existing Material Contract or enter into any Contract that would be a Material Contract if in effect on the date of this Agreement other than in each case (A) any termination or renewal for one year or less in accordance with the terms of any existing Material Contract on substantially similar terms, (B) the entry into new Material Contracts in replacement of existing Material Contracts on terms not materially worse to the Company or the relevant Subsidiary, in the aggregate, than the current terms and (C) immaterial ministerial amendments, modifications or waivers of the terms of Material Contracts in the ordinary course (it being understood that this provision shall not apply to any employment, services, change in control, severance, deferred compensation, retention or similar Contract with any officer, director, or employee of the Company, which shall be governed by clause (vi) above);
(xii) incur, redeem or prepay any Indebtedness (including the issuance of any debt securities, warrants or other rights to acquire any debt security), except for (A) Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $2,000,000 in the aggregate, (B) Indebtedness in replacement of existing Indebtedness for borrowed money on terms substantially consistent with or more favorable to the Company than the Indebtedness being replaced, or (C) guarantees of Indebtedness of its wholly owned Subsidiaries otherwise incurred in compliance with this clause (xii);
(xiii) make any material change in business operations as defined in FINRA (NASD) Rule 1011(k);
(A) change its fiscal year or (B) make any material change in accounting methods, principles or practices used by it, except in each case as may be required (x) by GAAP or (y) by applicable Law, including Regulation S-X under the Securities Act;
(xv) other than consignment in accordance with the Company’s capital expenditures budget for calendar year 2019 or any capital expenditures budget for calendar year 2020 (which budget shall not materially exceed the aggregate amount of Company Products capital expenditures provided in the ordinary course of businesscapital expenditures budget for calendar year 2020), make any capital expenditure or expenditures, or incur any obligations or liabilities in connection therewith, which, individually, is in excess of $500,000 or, in the aggregate, are in excess of $2,000,000;
(xvi) settle or compromise any Action, other than settlements or compromises of claims that is not contemplated exclusively require the payment of money by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Nonits Subsidiaries of unreimbursed out-Budgeted Capital Expenditure that, when added to all other Nonof-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since pocket settlement amounts that are (A) accrued or reserved for as of the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) not in excess of $250,000 per Action or $2,000,000 in the aggregate for all Actions pursuant to this clause (B), or enter into any other meeting consent, decree, injunction or similar restraint or form of equitable relief or deferred prosecution agreement or similar agreement with any Government Authority that would impose any conduct conditions or remedies that would have a restrictive impact on the business of the Company’s shareholders to consider a proposal that Company or any of its Subsidiaries, or would reasonably be expected to impair, prevent impede or delay in any material respect the consummation of the transactions contemplated hereby;
(xv) enter into any agreementby this Agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of including obtaining the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company SubsidiariesShareholder Approval;
(xvii) settle cancel, compromise, waive or compromise release any litigationmaterial right or claim of the Company and its Subsidiaries;
(xviii) cancel, claimterminate or modify in any material respect, suitor take any action that could permit cancellation, action termination or proceedingmaterial modification of, except for settlements or compromises any Insurance Policy (other than (A) the payment, discharge or satisfaction, renewal of any Insurance Policy in place as of the date hereof in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) enter into any real property lease or modify, amend, renew, extend, waive or exercise any material right or remedy under or terminate any Lease, other than (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect renewal for one year or less, (B) terminate immaterial ministerial amendments, modifications or allow to lapse any material Company Permits;
(xx) waivers, in each case of the foregoing (A) fail to pay and (B), of any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than Lease in its reasonable business judgment or existence on the date hereof in the ordinary course of business in a manner consistent with past practice, practice or (BC) authorize the disclosure with respect to any third party Lease that requires a monthly rent payment of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, less than $3,000;
(xx) other than ordinary course director compensation, ordinary course compensation and employee benefit entitlements, ordinary course reimbursement of travel and entertainment expenses or advances regarding the same, in each case that are payable in the ordinary course of business consistent with past practice or as otherwise permitted pursuant to Section 7.1(a)(vi), enter into any transaction or arrangement with any (A) director, officer or employee of the Company, (B) Person who is or was, since the Applicable Date, a greater than 5% shareholder of the Company or (C) any of their respective Affiliates;
(xxi) (A) acquire or agree to acquire any Equity Interests in, assets or accounts of, or make any investments in, any Financial Advisor or prospective Financial Advisor (including, for this purpose, any Person affiliated with any such Financial Advisors) in excess of $500,000 individually or $5,000,000, in the aggregate or (B) make any recruiting loans or similar advances (including advances of expenses) to any prospective Financial Advisor in excess of $500,000 individually or $2,500,000 in the aggregate; provided, however, that if the Closing does not occur on or prior to March 31, 2020, the aggregate limit set forth in sub-clause (A) shall increase to $10,000,000 and the aggregate limit set forth in sub-clause (B) shall increase to $5,000,000;
(A) make any change to the Financial Advisor “payout grids” or substantially similar compensation table (as in effect as of the date hereof) or (B) make any change to any other methodology affecting the rate of any other compensation with respect to the Financial Advisors, in each case, where such changes would be applicable to the Financial Advisor field force taken as a manner whole; provided that, in the case of (A) or (B), the Company or its Subsidiaries may make changes to the compensation payable to individual Financial Advisors on a case-by-case basis consistent with past practices; or
(xxiii) affirmatively authorize, agree or commit, or publicly announce an intention, to do any of the actions prohibited by this Section 7.1(a).
(b) Notwithstanding anything to the contrary in Section 7.1(a), or any other provision of this Agreement, neither the Company nor any of its Subsidiaries shall be prevented from undertaking, be required to obtain Parent’s consent in relation to, or incur any Liability as a result of effecting any of the following:
(i) any matter required by Law, required by any Government Authority or requested by any Government Authority as part of its supervision of the Company or any of its Subsidiaries;
(ii) the implementation of any transaction or the taking of any action required by, or otherwise permitted under, this Agreement;
(iii) any matter disclosed in the Company Disclosure Letter;
(iv) the performance of an obligation under any Contract existing as at the date hereof;
(v) any action by the Company or any Subsidiary thereof for, on behalf or at the direction of any Client or customer of the Company or any Subsidiary thereof (including investments in securities for or on behalf of customers or Clients), provided that such action is taken in the ordinary course of business consistent with past practice;
(xxivi) the release or discharge of any Liability owed by any Subsidiary of the Company to the Company or any of its Affiliates, or owed by the Company to any of its Subsidiaries or Affiliates; or
(vii) any action taken in connection with disaster recovery or related emergency response efforts with the intention of minimizing any adverse effect resulting from such efforts (provided that the Company shall promptly notify Parent of any such efforts).
(c) Neither Party shall knowingly take or cause to be taken permit any action, or knowingly fail of their Affiliates to take or cause to be taken any action, which action or failure to act that would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorizeprevent, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair impede the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests consummation of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock Merger or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid transactions contemplated by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessthis Agreement.
Appears in 1 contract
Sources: Merger Agreement (Ladenburg Thalmann Financial Services Inc.)
Interim Operations. 1
(a) The Company agrees that, during During the period (if any) from the date of this Agreement through the earlier of to the Closing Date or the termination of date, if any, on which this Agreement, Agreement is earlier terminated pursuant to Section 6.1 (except (1w) to as may be required by Law, (x) with the extent Parent prior written consent of Buyer, which consent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned delayed or delayed)conditioned, (2y) as contemplated or permitted by this Agreement, or (z) as set forth in Section 4.1(a) 4.1 of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementSchedules), the Company shall, business of the Companies and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions conducted only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner all material respects consistent with past practice practice, and, to the extent consistent therewith, the Sellers and the Companies shall use commercially reasonable efforts to (i) preserve intact the Companies’ and the Company Subsidiaries’ current business organization and (ii) preserve the Companies’ and the Company Subsidiaries’ relationships with customers, suppliers and others having business dealings with them. Without limiting the generality of the foregoing, except (w) as may be required by Law, (x) with the prior written consent of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, (y) as contemplated or permitted by this Agreement, or (z) as set forth in Section 4.1 of the Disclosure Schedules, prior to the Closing Date, the Companies and the Company Subsidiaries will not, and the Sellers will not cause the Companies or the Company Subsidiaries to:
(a) sell, pledge, dispose of or encumber any of their significant assets, except inventory or obsolete or excess equipment or assets sold in the ordinary course of business consistent with past practice; ;
(Bb) pursuant with respect to written Contracts the Companies, issue, sell, pledge or commitments existing dispose of any additional shares or interests (as applicable), or any options, warrants or rights of any kind to acquire any shares or interests (as applicable) with respect to the date Companies;
(c) cause, or take or omit to take any action to allow, any Material Contract to lapse (other than in accordance with its terms), to be modified in any materially adverse respect or otherwise to become impaired in any material manner with respect to the Companies or the Company Subsidiaries;
(d) acquire (by merger, consolidation or acquisition of this Agreement; stock or (Cassets) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers corporation, partnership or other third parties business organization or division thereof;
(e) incur any Indebtedness for borrowed money or guarantee any such Indebtedness or issue or sell any debt securities or guarantee any debt securities of others except in the ordinary course of business in a manner consistent with past practice;
(viif) directly make any material increase in compensation to any Company or indirectly repurchaseCompany Subsidiary employees or any material change in personnel policies, redeem employee benefits or otherwise acquire any shares other compensation arrangements affecting the employees of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company Companies or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxig) take any action to institute any new severance or cause termination pay practices with respect to any of their directors or managers (as applicable), officers or employees or to increase the benefits payable under their severance or termination pay practices except to the extent that any such increase is payable prior to or concurrently with the Closing;
(h) adopt or amend, in any material respect, except as contemplated hereby or as may be taken required by applicable Law or Order, any actionEmployee Benefit Plan;
(i) make or pay any dividend, distribution or interest or principal payment with respect to the Shares, Interests or Note, or knowingly fail to take make any payment under the Intercompany Credit Agreement by and between Coinstar and CES dated June 4, 2009 or cause to be taken the Services Agreement by and between CES and Coinstar dated June 4, 2009;
(j) make any action, which action change in accounting practices or failure to act would reasonably be expected to (A) prevent the Merger from qualifying policies except as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedrequired by GAAP; or
(xxiik) authorize, approve agree or enter into any agreement or make any commitment otherwise commit to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)the foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Stock and Interest Purchase Agreement (Coinstar Inc)
Interim Operations. 1
(a) The Except as required by applicable Law or as expressly contemplated by this Agreement, the Company covenants and agrees as to itself and its Subsidiaries that, during after the period date of this Agreement and prior to the Effective Time, the business of it and its Subsidiaries shall be conducted in all material respects in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates (other than as announced by the Company prior to the date hereof). Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement through until the earlier of the Closing or the termination of this AgreementEffective Time, except (1A) to the extent as otherwise expressly required or permitted by this Agreement or as required by Law, (B) as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned withheld or delayed), ) or (2C) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, the Company will not and will not permit its Subsidiaries to:
(3i) as may be required by adopt or propose any change in its certificate of incorporation or by-laws or other applicable Legal Requirementsgoverning instruments;
(ii) merge or consolidate the Company or any of its Subsidiaries with any other Person, except for any such transactions among wholly owned Subsidiaries of the Company, or other than in the ordinary course restructure, reorganize or completely or partially liquidate or otherwise enter into any Contracts imposing material changes or restrictions on its assets, operations or businesses, other than in the ordinary course;
(4iii) as expressly required acquire, directly or indirectly, whether by this Agreementpurchase, the Company shallmerger, and shall cause the Company Subsidiaries consolidation or acquisition of stock or assets or otherwise, any assets, securities, properties, interests, or businesses or make any investment (whether by purchase of stock or securities, contributions to capital, loans to, use commercially reasonable efforts to conduct its or property transfers), in each case, other than (A) in the ordinary course of business (it being understood and agreed that the acquisition of all or substantially all of the assets of any Person is not in the ordinary course of business; provided that any action expressly permitted by ), or (B) if not in the remaining provisions ordinary course of this Section 4.1(a) business, with a value or purchase price (including Section 4.1(athe value of assumed liabilities) not in excess of the Company Disclosure Schedule) will not constitute a violation $50 million in any transaction or related series of the foregoing. During the period from transactions or acquisitions pursuant to Contracts in effect as of the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this listed on Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) 6.1 of the Company Disclosure Schedule, Schedule (C) as may it being understood that capital expenditures are not meant to be required by applicable Legal Requirements, or (D) as expressly required captured by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company SubsidiarySection 6.1(a)(iii));
(iiiv) splitissue, combinesell, subdividepledge, changedispose of, exchangegrant, amend transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than the issuances, sales, pledges, dispositions, grants, transfers, leases, licenses, guaranties or encumbrances of shares by a wholly owned Subsidiary of the Company Subsidiaryto the Company or another wholly owned Subsidiary or the issuance or transfer of Shares pursuant to outstanding awards under Company Stock Plans), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiv) create or incur (A) any lien or other security interest on any Company Intellectual Property owned or exclusively licensed or that is material and non-exclusively licensed by the Company or any of its Subsidiaries or (B) any Lien on any other assets of the Company or any of its Subsidiaries having a value in excess of $50 million;
(vi) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company) in excess of $10 million in the aggregate;
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company to any other Subsidiary, or regular quarterly dividends not to exceed $0.37 per share, declared and paid consistent with prior timing) or enter into any Contract with respect to the voting of its capital stock;
(ivviii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
(by mergerix) incur, consolidationalter, operation of lawamend or modify, acquisition of stock, other equity interests any indebtedness for borrowed money or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries, or permit any Subsidiary of the Company to guarantee any indebtedness of the Company, other than in the case of indebtedness for borrowed money incurred in the ordinary course of business consistent with past practices (A) that does not exceed $200 million in the aggregate, (B) debt of the Company or a Subsidiary that is in replacement of existing indebtedness for borrowed money of the Company or such Subsidiary, as applicable, (C) guarantees incurred in compliance with this Section 6.1 by the Company of indebtedness of wholly owned Subsidiaries of the Company or (D) interest rate swaps on customary commercial terms consistent with past practice and in compliance with the Company’s risk management policies in effect on the date of this Agreement and not to exceed $500 million of notional debt in the aggregate;
(x) make or authorize any material assets except, capital expenditure in excess of $875 million in the aggregate during any 12 month period;
(1xi) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory other than in the ordinary course of business or in connection with an acquisition permitted under Section 6.1(a)(iii), enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement;
(3xii) inbound make any material changes with respect to accounting policies or procedures, except as required by changes in applicable generally accepted accounting principles;
(xiii) settle any Action before a Governmental Entity for an amount in the aggregate in excess of the amount set forth on Section 6.1(a)(xiii) of the Company Disclosure Schedule (excluding amounts covered by insurance) or for any obligation or liability of the Company in excess of such amount or agree to any material limitation or restriction on any aspect of the conduct of the Company’s or its Subsidiaries’ business (or, after giving effect to the Merger, Parent’s or its Subsidiaries’ business);
(xiv) other than in the ordinary course, amend or modify, in any material respect, or terminate any Material Contract or IP Contract, or cancel, modify or waive any material debts or claims held by it or waive any material rights;
(xv) except as in Section 6.1(a)(xv) of the Company Disclosure Schedule, make any Tax election, amend any Tax Return, settle or finally resolve any controversy with respect to Taxes or change any method of Tax accounting in each case, where the sum of amount of Taxes in question with respect to all such actions exceeds $50 million;
(xvi) (A) with regard to Intellectual Property owned by the Company or any of its Subsidiaries, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, disclose, cancel, abandon or allow to lapse or expire or otherwise dispose of any material Intellectual Property, other than licenses or other grants or assignments of Intellectual Property non-material Contracts granted in the ordinary course of business;
1 Note , or cancellation, abandonment, allowing to W&S: Subject to ongoing review by lapse or expire such Intellectual Property that is no longer used or useful in any of the Company.
’s or its Subsidiaries’ respective businesses or pursuant to Contracts in effect prior to the date of this Agreement; and (vB) with regard to other assets, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, licenses, operations, rights, product lines, businesses or interests therein of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services provided in the ordinary course of business in a manner consistent with past practice or and sales of obsolete equipment assets and except for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $50 million in the aggregate, other than pursuant to Contracts in effect prior to the date of this Agreement;
(xvii) except as required pursuant to existing written, binding plans or agreements in effect prior to the date of this Agreement or as set forth in Section 5.1(h)(i) of the Company Disclosure Schedule, or as otherwise required by applicable Law, (A) grant or provide any severance or termination payments or benefits to any director, officer or employee of the Company or any of its Subsidiaries, (B) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards to any director, officer or employee of the Company or any of its Subsidiaries, in each case other than to non-officer employees in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or , (C) as security for any borrowings permitted by Section 4.1(a)(viii); establish, adopt, amend or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or terminate any Company Subsidiary’s capital stock Benefit Plan (except as required by Law) or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with amend the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C)outstanding equity-based awards, (D) or (E) of this Section 4.1(a)(ix), (B) increase, or take any action to accelerate the vesting or payment ofpayment, or fund or in any other way secure the payment, of compensation or benefits of under any member of Company Benefit Plan, to the extent not already provided in any such Company BoardBenefit Plan, current employee(E) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, or former employee (F) forgive any loans to directors, officers or employees of the Company or any Company Subsidiaryof its Subsidiaries;
(xviii) agree, (C) grant authorize or commit to do any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee foregoing.
(b) Prior to making any widely distributed written communications to the employees of the Company or any of its Subsidiaries pertaining to material compensation or benefit matters that are affected by the transactions contemplated by this Agreement, the Company Subsidiary, (D) hire or promote any employee at or shall use its reasonable best efforts to the level of Vice President or above, or (E) terminate the employment of any employee provide Parent with a copy of the intended communication, Parent shall have a reasonable period of time to review and comment on the communication, and the Company or shall consider such comments prior to distributing any Company Subsidiary whose annual base salary exceeds $100,000 such communication to its employees.
(other than for cause); except, in each case, for: c) Parent and Merger Sub (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreementshall not take, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change shall not permit any of its methods of financial accounting or accounting practices in Subsidiaries to take, any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure action that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added reasonably likely to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay materially impair the consummation of the Merger and (2) shall not enter into any acquisition agreement, or make any acquisition, that is reasonably likely to prevent, materially delay or impair the consummation of the Merger. Parent shall not issue any Parent Common Stock (or subscription rights with respect thereto) prior to obtaining the Requisite Parent Vote unless the Stichting agrees to vote any Parent Common Stock received by it, or received by others who are bound to vote together with the Stichting, in favor of the proposal to approve the Merger and the other transactions contemplated hereby;.
(xvd) enter into any agreementNothing contained herein shall give to Parent or Merger Sub, understanding directly or arrangement with respect indirectly, rights to the voting of any capital stock control or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of direct the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions operations prior to the Mergers set forth Effective Time in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any violation of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) applicable Law. Prior to the extent Effective Time, the Company shall otherwise give its prior consent in writing (such consent not to be withheldexercise, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend consistent with the terms and conditions hereof, complete control and supervision of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessits operations.
Appears in 1 contract
Interim Operations. 1
(a) The Except (i) as set forth in Section 6.1(a) of the Company agrees thatDisclosure Letter, (ii) as expressly contemplated or permitted by this Agreement, (iii) as may be required to comply with applicable Law or any Order or (iv) with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned, it being agreed by Parent that its consent shall be deemed to have been given if Parent does not object in writing to a written request for such consent within five Business Days after such request for consent is delivered by the Company), during the period from the date of this Agreement through until the earlier of the Closing or Effective Time and the date of termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent Agreement in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in accordance with Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement9.1, the Company shall, and shall cause the Company each of its Subsidiaries to, conduct its respective business in all material respects in the ordinary course consistent with past practice and that it shall use its commercially reasonable efforts to conduct maintain its current relationship with its suppliers, manufacturers, distributors, customers, business associates, executives and other key employees and Governmental Entities.
(b) Except (i) as set forth in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a6.1(b) of the Company Disclosure ScheduleLetter, (ii) will as expressly contemplated or permitted by this Agreement, (iii) as may be required to comply with applicable Law or any Order, or (iv) with the prior written consent of Parent (which consent shall not constitute be unreasonably withheld, delayed or conditioned, it being agreed by Parent that its consent shall be deemed to have been given if Parent does not object in writing to a violation of written request for such consent within five Business Days after such request for consent is delivered by the foregoing. During Company), during the period from the date of this Agreement through until the earlier of the Closing or Effective Time and the date of termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent Agreement in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this accordance with Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement9.1, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(iiA) adjust, split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s its capital stock or the capital stock of any of its Subsidiaries; (B) declare, authorize or pay any dividend or make any other distribution in respect of the shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock (except for any dividend or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid distribution by any a wholly owned Subsidiary of the Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation Subsidiary of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company), ; (C) any business directly or division of another Personindirectly redeem, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, acquire any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock (except for the acquisition of Company Common Stock (1) tendered by employees or former employees in connection with a cashless exercise of Company Options or in order to pay taxes with respect to equity-based awards, or for the Company to satisfy withholding obligations in respect of such taxes, in connection with Company Options or other equity interestsequity-based awards) or (2) in connection with the forfeiture of equity-based awards granted pursuant to the Company Equity Plans); or (D) except for transactions solely between the Company and its Subsidiaries, or between Subsidiaries of the Company, issue, deliver, sell, pledge, dispose of, grant, award or encumber any shares of capital stock, ownership interests or voting securities, or any options, warrants, convertible securities or other than rights of any kind to acquire or receive any shares of capital stock, any other ownership interests or any voting securities (including restricted stock units, stock appreciation rights, phantom stock or similar instruments), of the Company or any of its Subsidiaries (except for issuances (1) of shares of Company Common Stock issuable upon the exercise or settlement of outstanding Company Options, options under the Company ESPP or other equity-based awards, in each case, that are outstanding as of the date hereof; (2) pursuant to the Rights Plan, (3) required to be made by virtue of the consummation of the Merger; or (4) required to be made pursuant to this Agreement);
(viii) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease mortgage, encumber, dispose of or license otherwise subject to any third party, or incur any Lien on (other than a Permitted Lien) any of its material tangible property assets or tangible assetsmaterial properties (other than to a wholly owned Subsidiary), except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation asset sale or other business combination (including formation of lawa joint venture) or cancel, division release or otherwise), assign any material Company IP Indebtedness or material tangible assets of the Companyclaim, other than: or restructure, reorganize or completely or partially liquidate, in each case, except (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice (which for the avoidance of doubt and without limitation of the foregoing shall be deemed to include the sale or other disposition of supply, inventory or trading stock in the ordinary course of business), (B) dispositions of obsolete equipment or worthless assets, (C) sales of receivables and other assets in the ordinary course of business consistent with past practice, (D) sales of immaterial assets for a purchase price of $10,000,000 or less in any single case or $25,000,000 in the aggregate; and (E) leases and subleases of real property owned by the Company or any Company Subsidiary and leases of real property under which the Company or any Company Subsidiary is a tenant or a subtenant and voluntary terminations or surrenders of such leases;
(iii) make any acquisition, by purchase or other acquisition of stock or other equity interests, by merger, consolidation, asset purchase or other business combination, or by contributions to capital, or make any material purchases of any property or assets (including material Intellectual Property) in or from any other Person other than a wholly owned Subsidiary of the Company, or make any loan to any Person, except (A) as expressly required by the terms of any Contract in force on the date of this Agreement, (B) as otherwise permitted by this Section 6.1(b); (C) for portfolio acquisitions or Intellectual Property licensing in the ordinary course of business consistent with past practice; (BD) for foreclosures or acquisitions of control in a fiduciary, agent or similar capacity or in satisfaction of debts previously contracted in good faith or pursuant to written Contracts contracts or commitments existing as of agreements entered into prior to the date of this Agreementhereof; or and (CE) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties acquisitions in the ordinary course of business consistent with past practice and, in any case, involving consideration in an aggregate amount not in excess of $25,000,000;
(iv) enter into, renew, extend, amend, waive any material rights under or terminate any Contract that is or would constitute a manner Material Contract, in each case other than in the ordinary course of business;
(v) other than as required by any Contract in effect on the date hereof (including, without limitation, this Agreement and the Company Benefit Plans) or applicable Law, (A) increase, or commit to increase, the salary, wages, benefits, bonuses or other compensation or severance payable to any of its current or former directors, officers or other employees, other than salary or wage increases made in the ordinary course of business, consistent with past practice, to employees who receive annual compensation of less than $250,000, (B) amend, establish, enter into or terminate any Company Benefit Plan (or arrangement that would be a Company Benefit Plan if in existence on the date hereof) or collective bargaining or similar agreement other than amendments to the Company health and welfare plans that are not material, (C) accelerate the vesting of any stock options or other stock-based compensation or (D) hire any director or employee with annual base compensation of $200,000 or more;
(vi) amend the Company Charter or Company By-Laws or amend in any material respect the certificate of organization, by-laws or any other organizational documents of any Company Subsidiary;
(vii) directly or indirectly repurchase, redeem or otherwise acquire incur any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness Indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directlyassume, contingently guarantee or otherwise) endorse or make any loans or capital contributions to any other otherwise become responsible for the obligations of another Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries except, in respect thereof);
(ix) each case, (A) adopt, terminate intercompany guarantees or amend intercompany “keep well” or other agreements to maintain any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee financial statement condition of the Company or any Company Subsidiary, (B) letters of credit issued in the ordinary course of business, (C) grant any rights to severance, retention, change Indebtedness incurred through the revolving credit facility under the Credit Agreement (including in control or termination pay to any member respect of the Company Board, current employee or former employee letters of the Company or any Company Subsidiarycredit), (D) hire or promote any employee at or to the level Indebtedness having an aggregate principal amount outstanding that is not in excess of Vice President or above, or $5,000,000 and (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are provided that, in the ordinary course case of business in a manner consistent with past practice; clauses (D) and (6) E), such Indebtedness shall be prepayable without any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedulepremium, penalty or similar cost;
(xviii) except in the ordinary course of business, (i)(A) amend make or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material Tax liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any of its Subsidiaries, file any material amendment to an income or other material Tax Return, or waive any statute of limitations in respect of Taxes except as required by Law;
(ix) make any material changes in its accounting methods or method of Tax accounting, practices or policies, except as may be required under GAAP (or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization;
(x) enter into, renew or amend in any material respect any transaction, Contract, arrangement or understanding between the Company Subsidiary or any Subsidiaries, on the one hand, and any Affiliate of the Company (other than any of the Company’s Subsidiaries), on the other hand, of the type that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Exchange Act;
(xi) make or authorize capital expenditures except (A) as budgeted in the Company’s current plan approved by the Company Board that was made available to Parent prior to the date hereof, (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, practice or (BC) those that do otherwise in an amount not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than to exceed $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied3 million; or
(xxiixii) authorizeagree to, approve or enter into any agreement or make any commitment to to, take any of the actions described in clauses (i) through (xxi) of prohibited by this Section 4.1(a6.1(b).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (Par Pharmaceutical Companies, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through ------------------ to the earlier Effective Time, except as specifically contemplated by this Agreement (including Section 3.02) or otherwise as consented to or approved in writing by the Purchaser, the Seller shall cause the Company and the Subsidiaries to adhere to each of the Closing or following:
(a) the termination of this Agreement, except (A) to the extent Parent Business shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii)be conducted only in, and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) the Company and each of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementSubsidiaries shall not take any action except in, the Company shall not (ordinary and shall not permit any Company Subsidiary to):
(i) amend usual course of the Company’s Organizational Documents or amend the Organizational Documents of any Company SubsidiaryBusiness consistent with past practice;
(iib) splitneither the Company nor any of the Subsidiaries shall make or propose any change or amendment to its respective certificate of incorporation, combineother charter document, subdivideby-laws or operating agreement, changeas applicable;
(c) neither the Company nor any of the Subsidiaries shall issue or sell, exchangeor authorize the issuance or sale of, amend the terms of or reclassify any shares of the Company’s its capital stock or any of its other equity interests of the Company securities or issue any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible into or exchangeable for, or options, warrants or to purchase, scrip, rights to acquiresubscribe for, calls or commitments of any character whatsoever relating to, or enter into any contract, understanding or arrangement with respect to the issuance of, any shares of its capital stock or any of its other equity interestssecurities, other than or enter into any arrangement or contract with respect to the purchase or voting of shares of Company Common Stock issuable upon exercise its capital stock or adjust, split, combine or reclassify any of outstanding Company Optionsits securities, or make any other changes in its capital structure;
(vid) except as permitted in connection with any transaction between Section 3.02, the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on the Subsidiaries shall not undertake any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services actions specified in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof2.02(i);
(ixe) (A) adoptthe Company shall, terminate or amend any Company Plan except and shall cause the Subsidiaries to, use all reasonable efforts to preserve intact the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member business organization of the Company Boardand each of the Subsidiaries, current employeeto keep available the services of its and their present officers and key Employees, and to preserve the goodwill of those having business relationships with it and the Subsidiaries;
(f) neither the Company nor any of the Subsidiaries shall take any action with respect to the grant of any severance or former employee termination pay (otherwise than pursuant to written Plans of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan Subsidiaries in effect on the date hereof; ) or with respect to any increase of benefits payable under its written Plans providing for severance or termination pay in effect on the date hereof;
(5g) neither the Company nor any of the Subsidiaries shall (except as required by law and except for salary increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are other employee benefit arrangements in the ordinary course of business in a manner the Business consistent with past practice; and (6) any other actions set forth practice that do not result in Section 4.1(a)(ix) of a material increase in benefits or compensation expense to the Company Disclosure Scheduleor any Subsidiary or pursuant to collective bargaining agreements as presently in effect) adopt or amend any Plan or other arrangement for the benefit or welfare of any Employee or increase in any manner the compensation or fringe benefits of any Employee or pay or grant any benefit not required by any existing Plan or arrangement; provided, however, that the Company and the Subsidiaries shall have ----------------- the right to change the terms of any such Plan or arrangement pertaining to transaction incentive bonuses, to the extent that such change does not result in any cost increase to the Purchaser, the Company or the Subsidiaries;
(xh) except with respect to transactions between and among the Company and any of the Subsidiaries or the endorsement of negotiable instruments in the ordinary course of the Business, neither the Company nor any of the Subsidiaries shall guarantee any Indebtedness (other than any guaranty of Subsidiary Indebtedness in the ordinary course of the Business) or the obligations of any Person;
(i) except in the ordinary course of businessthe Business consistent with past practice or in the case of obsolete or redundant assets, (i)(A) amend or terminate (those requiring replacement, and except for terminations pursuant to as disclosed on Schedule 2.02(i), the expiration Company shall not, ---------------- and shall not permit any Subsidiary to, sell, lease or otherwise dispose of any of its assets or any of the existing term Company's or any Subsidiary's interest in any of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contractsits assets, or (ii) enter into any Contract agreements to do any of the foregoing (including any agreement to sell, lease, occupy or agreement that, if in effect on use by easement or otherwise any part of the date of this Agreement, would constitute a Material ContractReal Property);
(xij) change the Company shall not, and shall not permit any Subsidiary to, acquire (for cash, shares of its methods stock or other consideration) (including by merger, consolidation or acquisition of financial accounting stock or accounting practices in assets) any material respect other than as required by changes in GAAPPerson or any division or assets thereof;
(xiik) the Company shall not, and shall not permit any Subsidiary to, authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company or any of the Subsidiaries;
(l) the Company shall not, and shall not permit any Subsidiary to, make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period elections or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability Liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, ;
(m) other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations Business consistent with respect to a material amount of Taxes;
(xiii) past practice and other than consignment the discharge of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) Liabilities of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)by the Seller as contemplated by Exhibit D, except that the Company shall not, and shall not --------- permit any Subsidiary to, waive any material rights or any Company Subsidiary may make any Non-Budgeted Capital Expenditure thatpayment, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would notdirect or indirect, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation material Liability of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, of the Subsidiaries before the same comes due in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiariesaccordance with its terms;
(xviin) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheldnot, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s , fail to maintain its existing insurance coverage in effect or, in the event any such coverage shall be terminated or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect lapse, to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergersextent available at reasonable cost, procure substantially similar substitute insurance policies which in all material respects are in at least such amounts and against such risks as are currently covered by such policies;
(iio) splitthe Company shall not, combineand shall not permit any Subsidiary to, subdivideenter into any collective bargaining agreement or any successor collective bargaining agreement;
(p) the Company shall not, changeand shall not permit any Subsidiary to, exchange, amend the terms of enter into any long term purchase or reclassify any shares of Parent’s capital stock sales agreement or other equity interests similar arrangement (other than the renewal of any sales agreements in effect as of the date hereof);
(q) the Company shall not, and shall not permit any Subsidiary to, enter into any Derivative Contracts having a term which extends beyond the Closing Date;
(r) the Company shall not make or commit to any capital expenditures in excess of the Company, except 's capital budget for any such transaction involving only wholly owned Parent Subsidiaries;calendar year 2000 nor in excess of the Company's capital budget for calendar year 2001 when approved by its Board of Directors; and
(iiis) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company shall not, and shall not permit any Subsidiary to, enter into any contract, agreement, commitment or arrangement to do any of the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing or the termination of Effective Time, except (A) as required by applicable Laws, (B) as otherwise required by this Agreement, except or by the terms of any Contract, (1C) to as set forth in Section 6.1(a) of the extent Company Disclosure Letter or (D) as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), it and its Subsidiaries shall use their respective reasonable best efforts to conduct the business of it and its Subsidiaries in the ordinary course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to preserve their business organizations intact and maintain all of their Licenses and relations with subscribers, suppliers, distributors, creditors, lessors, employees and business associates. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the Effective Time, except (1) as required by applicable Laws, (2) as otherwise expressly required by this Agreement or by the terms of any Contract, (3) as set forth in Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent may approve in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned or delayed), ) or (B5) as set forth in Section 4.1(a) of for intercompany transactions between or among the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementand any of its Subsidiaries in the ordinary course of business, the Company shall will not (and shall will not permit any Company Subsidiary its Subsidiaries to)::
(i) amend the Company’s Organizational Documents adopt any change in its certificate of incorporation or amend the Organizational Documents of any Company Subsidiarybylaws or other applicable governing instruments (whether by merger, consolidation or otherwise);
(ii) splitacquire assets (excluding pursuant to capital expenditures) from any other Person (x) with respect to fiscal year 2015, combinein excess of any remaining amounts budgeted in the Company Board approved budget for fiscal year 2015; (y) with respect to fiscal year 2016, subdividein excess of the aggregate purchase price of assets (excluding pursuant to capital expenditures and excluding the acquisition of product lines, changebusinesses or interests therein) acquired during fiscal year 2015; or (z) that constitute a product line, exchangebusiness or any interest therein;
(iii) issue, amend sell, pledge, dispose of, grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary of the Company Subsidiaryto the Company or another wholly-owned Subsidiary or the issuance of Shares in respect of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the Stock Plans as in effect on the date of this Agreement), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiiv) create or incur any Lien (other than in connection with capital leases entered into in the ordinary course of business) material to the Company or any of its Subsidiaries not incurred in the ordinary course of business on any assets of the Company or any of its Subsidiaries having a value in excess of $10 million in the aggregate;
(v) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company) in excess of $10 million in the aggregate;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly direct or indirect wholly-owned Company Subsidiary to the Company or another wholly to any other direct or indirect wholly-owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(ivvii) acquire (by mergerreclassify, consolidationsplit, operation of lawcombine, acquisition of stocksubdivide or redeem, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its capital stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock (other than the withholding of Shares to satisfy withholding Tax obligations and net share settlements to cover the exercise price of stock options in respect of Company Equity Awards outstanding as of the date of this Agreement in accordance with their terms and, as applicable, the Stock Plans as in effect on the date of this Agreement);
(viii) incur or assume any indebtedness for borrowed money or guarantee, indemnify, endorse or otherwise as an accommodation become responsible for any such indebtedness of another Person, or issue or sell any debt securities or warrants or other equity interestsrights to acquire any debt security of the Company or any of its Subsidiaries;
(ix) incur any capital expenditures, except (x) to the extent reasonably necessary to avoid a material business interruption as a result of any act of God, war, terrorism, earthquake, fire, hurricane, storm, flood, civil disturbance, explosion, partial or entire failure of utilities or information technology systems, or any other similar cause not reasonably within the control of the Company or its Subsidiaries or (y) in any six month period, commencing October 1, 2015, the Company may make aggregate Qualifying Capital Expenditures (as defined in Schedule 6.1(a)(ix)) up to the Capex Cap (as defined in Schedule 6.1(a)(ix) of the Company Disclosure Letter) applicable to such six month period;
(x) enter into any Contract that would have been a Material Contract (substituting $10 million for any dollar thresholds set forth in the definition of “Material Contracts”) had it been entered into prior to the date this Agreement or amend or modify, or elect to terminate, in any material respect adversely to the Company or any of its Subsidiaries, any such Material Contract, other than shares extensions of such Material Contracts in effect on the day of this Agreement for a period of up to one (1) year on terms and conditions at least as favorable to the Company Common Stock issuable upon exercise of outstanding Company Optionsand its Subsidiaries, in the aggregate, as the existing terms and conditions;
(vixi) except in connection with commence, settle, compromise or discontinue any transaction between action, suit, claim, litigation, audit, investigation, arbitration, proceeding or other controversy, including any stockholder litigation or dispute against the Company or any of its officers or directors that relates to the Merger and the Transactions involving or against the Company or any of its Subsidiaries (“Merger Litigation”), other than (1) settlements that require payments by the Company or any of its Subsidiaries, net of insurance recoverables and any wholly owned applicable reserves, not in excess of $10 million in the aggregate and (2) claims or litigation to the extent of the applicable reserves set forth in the Company Subsidiary or among any wholly owned Company SubsidiariesReports, that, in the case of each of clauses (i) and (ii), are not Merger Litigation;
(xii) transfer, sell, assignlease, transferlicense, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, licenses, operations, rights, product lines, businesses or interests therein of the Company or its Subsidiaries, including capital stock of any of its Subsidiaries, except (A) for the sale, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company’s products, other than: (A) sales of inventory, goods services or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets to its customers in the ordinary course of business consistent with past practice; , (B) sales of obsolete assets, (C) except for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $10 million in the aggregate and (D) other than pursuant to written Contracts in effect prior to the date of this Agreement;
(xiii) except as required pursuant to the terms of any Company Plan in effect as of the date hereof, or commitments existing as otherwise required by applicable Laws, take any of the director, officer or employee or employee benefit and compensation related actions set forth on Schedule 6.1(a)(xiii)(A) through (D) of the Company Disclosure Letter;
(xiv) take any of the employee related actions set forth in Schedule 6.1(a)(xiv) of the Company Disclosure Letter;
(xv) change an annual accounting period or adopt or change any of its accounting methods, principles or practices, in each case, including for Tax purposes (including with respect to reserves), except as required by applicable Law or GAAP;
(xvi) terminate, cancel or amend any insurance policy maintained by it covering the Company or any of its Subsidiaries or their respective properties that is not replaced by a comparable or greater amount of insurance coverage, or fail to use commercially reasonable efforts to maintain in full force and effect any material insurance policy in a form and amount consistent with past practice; provided that the Company may agree to any increases or decreases in deductibles, policy amounts or coverage amounts in its reasonable discretion;
(xvii) enter into any new line of business that is unrelated to any line of business conducted by the Company or any of its Subsidiaries as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viixviii) directly amend or indirectly repurchasemodify in any respect materially adverse to the Company, redeem any material Franchise or any material License issued by any Governmental Entity and held by the Company or any of its Subsidiaries;
(xix) fail to maintain all material Franchises and all material Licenses held by the Company or any of its Subsidiaries in full force and effect, except for such failure as would not, and would not reasonably be expected to, materially and adversely impact the Company and its Subsidiaries, taken as a whole;
(xx) fail to make any required contributions to the federal Universal Service Fund or any state equivalent thereto (other than any contributions that are not yet due and payable or the validity or amount of which is being contested in good faith);
(xxi) make any payment that is a Restricted Payment (as defined in the Company’s indentures under which its existing indebtedness has been issued) under any existing indebtedness of the Company (but not a Restricted Payment by any Subsidiary of the Company to the Company or another Subsidiary of the Company that is not otherwise acquire prohibited by the terms of such indebtedness); or
(xxii) enter into, amend or modify any shares Contract with any Affiliate of the Company that is not a Subsidiary of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of Contract that would be a “Related Party Transaction” as defined under the Company’s or any Company Subsidiary’s capital stock or equity interestsRelated Party Transaction Approval Policy, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on extensions of existing revolving loans), redeem, repurchase, prepay (other Contracts involving revenues or expenses in any fiscal year of less than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company $120,000 and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except only to the extent permitted by clauses such Contract can be terminated at will without any cost or penalty at Closing; provided that Contracts for access to office space or other incidental matters need only be terminable at any time after thirty (B), (C), (D30) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant days after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;Closing.
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xiixxiii) make (except for elections made in the ordinary course of business), or change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend file any material amended Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of TaxesReturn, enter into any closing agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make settle any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that material Tax claim or assessment relating to the Company or any of its Subsidiaries, surrender any right to claim a refund of a material amount of Taxes, or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company Subsidiary may make or any Non-Budgeted Capital Expenditure thatof its Subsidiaries; or
(xxiv) agree, when added authorize or commit to all other Non-Budgeted Capital Expenditures made by do any of the foregoing. provided, however, that nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, any right to control or direct the operations of the Company and its Subsidiaries prior to the Effective Time. Prior to the Effective Time, each of the Company Subsidiaries since and Parent shall exercise, consistent with the date other terms and conditions of this Agreement, complete control and supervision over their respective businesses, and notwithstanding anything to the contrary in this Agreement, no consent of Parent shall be required with respect to any matter set forth in this Section 6.1 or elsewhere in this Agreement would not, in to the aggregate, exceed extent the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting requirement of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that such consent would reasonably be expected to impair, prevent or delay the consummation be a violation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)applicable Laws.
(b) Parent agrees that, during shall not knowingly take or permit any of its Subsidiaries to take any action that is reasonably likely to prevent the period from the date of this Agreement through the earlier consummation of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessMerger.
Appears in 1 contract
Sources: Merger Agreement (CSC Holdings LLC)
Interim Operations. 1
(a) The Except (i) as set forth in Section 7.1(a) of the Company agrees thatDisclosure Letter, (ii) as expressly contemplated or permitted by this Agreement, (iii) as may be required to comply with applicable Law, any Order or any written notice from a Governmental Entity or (iv) with the prior written consent of Parent (which consent shall not be unreasonably withheld delayed or conditioned), during the period from the date of this Agreement through until the earlier of the Closing or Effective Time and the date of termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent Agreement in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in accordance with Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement10.1, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct its respective business in all material respects, in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this course.
(b) Except (i) as set forth in Section 4.1(a) (including Section 4.1(a7.1(b) of the Company Disclosure ScheduleLetter, (ii) will as expressly contemplated or permitted by this Agreement, (iii) as may be required to comply with applicable Law, any Order or any written notice from a Governmental Entity, or (iv) with the prior written consent of Parent (which consent shall not constitute a violation of the foregoing. During be unreasonably withheld delayed or conditioned), during the period from the date of this Agreement through until the earlier of the Closing or Effective Time and the date of termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent Agreement in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this accordance with Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement10.1, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(iiA) adjust, split, combine, subdivide, change, exchange, amend the terms of combine or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s its capital stock or the capital stock of any of its Subsidiaries; (B) declare or pay any dividend or make any other distribution in respect of the shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock (except for any dividend or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid distribution by any a wholly owned Subsidiary of the Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation Subsidiary of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company), ; (C) any business directly or division of another Personindirectly redeem, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, acquire any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock (except for the acquisition of Company Common Stock (1) tendered in connection with a cashless exercise of Company Options or in order to pay Taxes with respect to equity-based awards, or for the Company to satisfy withholding obligations in respect of such Taxes, in connection with Company Options or other equity interestsequity-based awards or (2) in connection with the forfeiture of equity-based awards granted pursuant to the Company Equity Plans); or (D) except for transactions solely between the Company and its Subsidiaries, or between Subsidiaries of the Company, issue, deliver, sell, pledge, dispose of, grant, award or encumber any shares of capital stock, ownership interests or voting securities, or any options, warrants, convertible securities or other than rights of any kind to acquire or receive any shares of capital stock, any other ownership interests or any voting securities (including restricted stock units, stock appreciation rights, phantom stock or similar instruments), of the Company or any of its Subsidiaries (except for issuances (1) of shares of Company Common Stock issuable upon the exercise or settlement of outstanding Company Options, rights under the Company ESPP or pursuant to other equity-based awards in effect on the date hereof, (2) required to be made by virtue of the consummation of the Merger or the Offer, or (3) required to be made pursuant to this Agreement or any other agreement in effect on the date hereof to which the Company is a party, or otherwise permitted by this Section 7.1(b));
(viii) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease mortgage, encumber, dispose of or license otherwise subject to any third party, or incur any Lien on (other than a Permitted Lien) any of its material tangible property assets or tangible assetsmaterial properties (other than to a wholly owned Subsidiary), except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation asset sale or other business combination (including formation of lawa joint venture) or cancel, division release or otherwise), assign any material Company IP Indebtedness or material tangible assets of the Companyclaim, other than: in each case, except (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets such actions in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts , including dispositions of obsolete or commitments existing as worthless assets, sales of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or receivables and other third parties assets in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of and the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares licensing of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant Intellectual Property to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except customers in the ordinary course of business, (i)(AB) sales of immaterial assets for a purchase price of $2,000,000 or less in any single case or $8,000,000 in the aggregate and (C) leases and subleases of real property owned by the Company or any Company Subsidiary and leases of real property under which the Company or any Company Subsidiary is a tenant or a subtenant and voluntary terminations or surrenders of such leases;
(iii) make any acquisition, by purchase or other acquisition of stock or other equity interests, by merger, joint venture, consolidation, asset purchase or other business combination, or by contributions to capital, or make any material purchases of any property or assets, in or from any other Person other than a wholly owned Subsidiary of the Company, except (A) in all cases as expressly required by the terms of any Contract in force on the date of this Agreement; and (B) as otherwise permitted by this Section 7.1(b);
(iv) enter into, renew, extend, amend or terminate any Contract that is or would constitute a Material Contract, in each case other than in the ordinary course of business;
(v) except for terminations pursuant to as required by Law or any Contract in effect on the expiration date hereof (including, without limitation, this Agreement and the Company Benefit Plans and Employment Agreements) or as set forth on Section 7.1(b)(v) of the existing term of Company Disclosure Letter: (A) amend materially or terminate any Material Contract) any Material Contract Company Benefit Plan or (B) waive, release or assign any material rights under any Material ContractsEmployment Agreement, or (ii) establish, adopt or enter into any Contract employment agreement or agreement any plan, program, policy or arrangement that, if in effect on the date of this agreement, would be a material Company Benefit Plan or material Employment Agreement, would constitute (B) enter into any collective bargaining agreement or similar material labor agreement with a Material Contract;
labor union, works council or other employee representative, or (xiC) change increase the salary or wages, as applicable, bonus or other incentive compensation, or other benefits or compensation of any director, officer or employee of the Company or any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (Subsidiaries, except for elections (i) increases in the ordinary course of business consistent with past practice in connection with annual performance and salary reviews, not to exceed, in the aggregate, four percent (4%) of such person’s compensation or (ii) non material increases in benefits or compensation made in the ordinary course of business);
(vi) amend the Company Charter or Company By-Laws;
(vii) incur any Indebtedness, change except, in each case, (A) intercompany guarantees or revoke intercompany “keep well” or other agreements to maintain any material Tax election, change any Tax accounting period or material method financial statement condition of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes the Company or any Tax auditCompany Subsidiary, claim, (B) letters of credit or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than guarantees issued in the ordinary course of business, (C) Indebtedness incurred through the revolving credit facility under the Credit Agreement (including in respect of letters of credit), (D) Indebtedness having an aggregate principal amount outstanding that is not in excess of $2,500,000 (provided that any such Indebtedness is prepayable without premium or penalty, other than customary breakage costs), (E) Indebtedness incurred in connection with the refinancing of any Indebtedness existing on the date hereof (other than the Notes under the Notes Indenture or the Credit Agreement) or permitted to be incurred, assumed or otherwise entered into hereunder (provided that any such Indebtedness is prepayable without premium or penalty, other than customary breakage costs) and (F) capital leases entered into in the ordinary course of business consistent with past practice;
(viii) change any material method of Tax accounting, or take any material position on any material Tax Return, in each case that is inconsistent with elections made or positions taken in preparing or filing similar Tax Returns in prior periods; enter into any closing agreement or settle or compromise any material Tax liability of the Company or any of its Subsidiaries, or agree to an any extension or waiver of the statute of limitations with respect to a the assessment or determination of any material amount of Taxes;
(xiii) other than consignment of Company Products , in each case except in the ordinary course of business, ;
(ix) make any capital expenditure that is not contemplated by the capital expenditure budget material changes in its accounting methods, practices or policies, except as may be required under GAAP (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the Company Disclosure Schedule Financial Accounting Standards Board or any similar organization;
(a “Non-Budgeted Capital Expenditure”)x) waive, except settle or compromise any material pending or threatened suit, audit, action or claim, other than waivers, settlements or compromises that involve only the payment of monetary damages by the Company or any of its Subsidiaries;
(xi) fail to maintain and protect, or abandon, allow to lapse, expire or be cancelled any registration or application for registration for, material Company Subsidiary may make Intellectual Property, or knowingly disclose to any Non-Budgeted Capital Expenditure thatPerson not an employee of, when added to all other Non-Budgeted Capital Expenditures made by or consultant or advisor to, the Company and or any of its Subsidiaries bound by confidentiality obligations to the Company Subsidiaries since or such Subsidiary, or otherwise knowingly disclose any trade secret, process or know-how not a matter of public knowledge prior to the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceedingAgreement, except for settlements pursuant to judicial order or compromises other than (A) the payment, discharge process or satisfaction, commercially reasonable disclosures in the ordinary course of business in a manner consistent with past practice, made under an existing Contract or agreement containing confidentiality obligations for the benefit of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary its Subsidiary, as applicable;
(other than confidentiality obligations), (yxii) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part communicate with employees of the Company or any Company Subsidiary;
(xviii) materially reduce of its Subsidiaries regarding the amount of insurance coverage future compensation, benefits or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner other treatment that adversely impacts they will receive following the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IPMerger Closing, other than in its reasonable business judgment or in the ordinary course of business in a manner (i) any such communication which is consistent with past practiceprior directives or documentation provided to the Company by Parent (in which case, Parent shall provide the Company with reasonable prior notice of, and the reasonable opportunity to review and comment upon, any such communication), (ii) any such communication which addresses any employee’s right to receive the Offer Price or the Merger Consideration or any employee’s treatment of his or her equity awards, (iii) any such communication which addresses any employee in their capacity as a Stockholder of the Company or (Biv) authorize the disclosure to any third party communication regarding matters addressed in Section 8.4 of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfiedthis Agreement; or
(xxiixiii) authorizeagree to, approve or enter into any agreement or make any commitment to to, take any of the actions described in clauses (i) through (xxi) of prohibited by this Section 4.1(a7.1(b).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The From the date of this Agreement until the earlier of the Effective Time and termination of this Agreement in accordance with its terms, the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through until the earlier Effective Time, the business of it and its Subsidiaries shall be conducted in the ordinary and usual course consistent with past practice and, to the extent consistent therewith, it and its Subsidiaries shall use their respective reasonable best efforts to (x) preserve intact their business organizations, assets and lines of business and (y) maintain its and their existing relations and goodwill with Governmental Entities, customers, suppliers, employees and agents. Without limiting the generality of the Closing or foregoing and in furtherance thereof, from the termination date of this Agreement until the Effective Time, except (A) as otherwise expressly required by this Agreement, except (1B) to the extent as Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed), (2C) as required by applicable Laws or definitive interpretations thereof or by any Governmental Entity or (D) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company shallwill not, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing permit its Subsidiaries, to:
(i) adopt any amendments to its charter or the termination of this Agreementbylaws or, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections any Subsidiary that is not a corporation, similar applicable organizational documents;
(iv)ii) (A) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of other than this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayedAgreement), (B) acquire by merging or consolidating with, or by purchasing an equity interest in or portion of the assets of (other than as set forth in Section 4.1(a) of the Company Disclosure Schedule4.1(a)(iii)), or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, (C) as may be required by applicable Legal Requirementstake or omit to take any action that would cause any rights under Material Intellectual Property, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) including with respect to any shares of registrations or applications for registration, to lapse, be abandoned or canceled, or fall into the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiarypublic domain, other than dividends actions or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets omissions in the ordinary course of business consistent with past practice; practice and not otherwise in violation of this Section 4.1 or (D) enter into a joint venture or partnership or similar third-party business enterprise;
(iii) acquire assets outside of the ordinary course of business or capital stock from any other Person, other than (A) acquisitions of assets at or below fair market value with a purchase price not in excess of $500,000 individually or $2,000,000 in the aggregate, in each case for any transaction or series of related transactions, and capital expenditures permitted by clause (x) of this Section 4.1 and (B) acquisitions pursuant to written the Contracts or commitments existing in effect as of the date of this Agreement; or (CAgreement set forth on Section 4.1(a) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in of the ordinary course of business in a manner consistent with past practiceCompany Disclosure Letter;
(viiiv) directly issue, sell, pledge, dispose of, grant, transfer, encumber, or indirectly repurchaseauthorize the issuance, redeem sale, pledge, disposition, grant, transfer or otherwise encumbrance of, any shares of capital stock of the Company or any its Subsidiaries (other than (A) the issuance of Shares upon the exercise of Company Options and the settlement of Restricted Shares, Restricted Stock Units, and Performance Stock Units (and dividend equivalents thereon, if applicable) outstanding on the date of this Agreement or (B) the issuance of shares of capital stock by a Subsidiary of the Company to the Company or another Subsidiary of the Company) or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of the Company’s or any Company Subsidiary’s such capital stock or equity interestssuch convertible, exchangeable or exercisable securities;
(v) make any loans, advances or capital contributions to or investments in any Person (other than the Company or any direct or indirect Subsidiary of the Company);
(vi) (A) declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or other property, with respect to its capital stock, except for dividends by any wholly owned direct or indirect Subsidiary of the Company to the Company or any other securities wholly owned direct or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares indirect Subsidiary of the Company’s , (B) split, combine or reclassify the Shares or any other outstanding capital stock of the Company Subsidiary’s or any of the Subsidiaries of the Company or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution therefor (other than issuances to the Company or another wholly owned Subsidiary of the Company), (C) redeem, purchase or otherwise acquire, directly or indirectly, any capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants other Rights of the Company pursuant or any of its Subsidiaries, except for acquisitions, or deemed acquisitions, of Shares or other equity securities of the Company in connection with (1) the satisfaction of Tax withholding obligations with respect to the exercise of repurchase rights existing prior to Company Options, Restricted Shares, Restricted Stock Units or Performance Stock Units outstanding on the date of this Agreement; or , (B2) shares the payment of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred outstanding on the date of this Agreement with Shares (including in connection with the exercise, vesting or settlement “net exercises”) and (3) forfeitures of Company Options, as applicableRestricted Shares, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, Restricted Stock Units or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptPerformance Stock Units, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after outstanding on the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if their terms as in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (and except for elections made in the ordinary course acquisitions or deemed acquisitions of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, Shares or other proceeding relating to a material amount equity securities of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made of its wholly owned Subsidiaries by the Company and the Company Subsidiaries since the date or any of this Agreement would notits wholly owned Subsidiaries, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xvD) enter into any agreement, understanding or arrangement with respect to the voting sale, voting, registration or repurchase of any the Company’s capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation Rights of the Company or any of its Subsidiaries; provided that nothing contained herein shall prohibit dividends and distributions paid or made on a pro rata basis by direct or indirect Subsidiaries of the Company Subsidiary in the ordinary course consistent with past practice;
(vii) redeem, repurchase, prepay, defease, incur, assume, endorse, guarantee or otherwise become liable for or modify the terms of any Indebtedness of the Company and its Subsidiaries in excess of $700,000 (it being understood that the terms of any such Indebtedness shall permit the repayment of such Indebtedness upon the Closing Date without premium or penalty). “Indebtedness” of any Person means (A) all indebtedness for borrowed money, (B) dissolutionany other indebtedness which is evidenced by a note, mergerbond, consolidationindenture, divisiondebenture or similar Contract, restructuring(C) all reimbursement obligations with respect to (1) letters of credit, recapitalization bank guarantee or other reorganizationbankers’ acceptances or (2) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than, in the case of clause (B2), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, those entered into in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, practice and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required all guarantees by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either such Person for obligations of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (constituting Indebtedness of such other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
Appears in 1 contract
Interim Operations. 1
(a) The Except (i) as described in Section 5.1(a) of the Company Disclosure Letter, (ii) as otherwise expressly required or permitted by this Agreement or any other Transaction Document, (iii) as required by applicable Law or (iv) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed, or denied), the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through until the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementClosing, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct operate the business of it and its business Subsidiaries in the ordinary course of business; provided that any action expressly permitted by consistent with past practice and to preserve their business organizations intact and maintain existing relations with the remaining provisions of this Section 4.1(aCompany’s executive officers.
(b) (including Section 4.1(a) of Without limiting the Company Disclosure Schedule) will not constitute a violation of generality of, and in furtherance of, the foregoing. During the period , from the date of this Agreement through until the earlier Closing, except (w) as described in the corresponding subsection of Section 5.1(b) of the Closing Company Disclosure Letter, (x) as otherwise expressly required or permitted by this Agreement or any Transaction Document, (y) as required by applicable Law or (z) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed or denied), the termination Company will not and will not permit its Subsidiaries to:
(i) adopt or propose any change in its or its Subsidiaries’ Organizational Documents;
(ii) (A) merge or consolidate itself or any of its Subsidiaries with any other Person, except for transactions among its wholly owned Subsidiaries or (B) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries;
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $250,000, or acquire any business or entity (whether by merger or consolidation, by purchase of substantially all assets or equity interests or by any other manner), in each case, in any transaction or series of related transactions, other than acquisitions or other transactions pursuant to Contracts to which the Company or any of its Subsidiaries are a party that are in effect as of the date of this Agreement;
(iv) sell, lease, license or otherwise dispose of any of its material assets or properties, except (A) to the extent Parent shall otherwise give its prior consent in writing (for sales, leases, licenses or other dispositions in the case ordinary course of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), business and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) for sales, leases, licenses or other dispositions of assets and properties with a fair market value not in excess of $250,000 in the aggregate or (C) pursuant to Contracts to which the Company or any of its Subsidiaries are a party that are in effect as set forth of the date of this Agreement;
(v) except pursuant to awards granted under the Stock Plan (which, for clarity, may be granted after the date of this Agreement in Section 4.1(a) the ordinary course of business consistent with past practice (including grants to new hires)), issue, sell, grant or authorize the issuance, sale or grant of any shares of capital stock or other securities of the Company Disclosure Schedule, or any of its Subsidiaries (C) as may be required other than issuances by applicable Legal Requirementsa wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company), or (D) as expressly required by this Agreementany options, warrants, convertible securities, subscription rights or other similar rights entitling its holder to receive or acquire any shares of such capital stock or other securities of the Company shall not (and shall not permit or any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryits Subsidiaries;
(iivi) reclassify, split, combine, subdivide, changeredeem or repurchase, exchange, amend the terms any of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or options, warrants or securities convertible or exchangeable into or exercisable for any Company Subsidiaryshares of its capital stock, except in connection with the repurchase, net exercise or settlement of awards under the Stock Plan or the withholding of shares to satisfy Tax obligations with respect to awards under the Stock Plan;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of enter into any Company Subsidiary, other than dividends or distributions only agreement with respect to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting of its capital stock;
(ivviii) acquire (by mergermake any loans, consolidationadvances, operation of law, acquisition of stock, other equity interests guarantees or assets, formation of a joint venture capital contributions to or otherwise) (A) any other Person, (B) any equity interest investments in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or any direct or indirect wholly-owned Subsidiary of the Company), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property than in the ordinary course of business;
1 Note (ix) incur any Indebtedness for borrowed money or guarantee any such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to W&S: Subject to ongoing review by the Company.
(v) except in connection with acquire any transaction between debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets Indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice; ;
(x) make or commit to make capital expenditures other than in an amount not in excess of $1,000,000, in the aggregate;
(xi) enter into any Contract that would have been a Company Material Contract had it been entered into prior to the date of this Agreement, other than in the ordinary course of business;
(xii) amend or modify in any material respect or terminate any Company Material Contract, or waive or release any material rights, claims or benefits under any Company Material Contract, in each case, other than in the ordinary course of business;
(xiii) make any material changes with respect to its accounting policies or procedures, except as required by changes in Law or GAAP;
(xiv) settle any Proceeding, except in the ordinary course of business or where such settlement is covered by insurance or involves only the payment of monetary damages in an amount not more than $250,000 in the aggregate;
(xv) except in the ordinary course of business consistent with past practice: (A) file any material amended Tax Return, (B) make, revoke or change any material Tax election, (C) adopt or change any material Tax accounting method or period, (D) enter into any agreement with a Governmental Entity with respect to material Taxes, (E) settle or compromise any examination, audit or other action with a Governmental Entity of or relating to any material Taxes or settle or compromise any claim or assessment by a Governmental Entity in respect of material Taxes, or (F) enter into any Tax sharing or similar agreement (excluding any commercial contract not primarily related to Taxes), in each case, to the extent such action could reasonably be expected to have any adverse and material impact on Parent;
(xvi) except in the ordinary course of business or pursuant to written Contracts the terms of any Company Benefit Plan in effect as of the date of this Agreement or commitments existing as required by Law, (A) materially increase the annual salary or consulting fees or target annual cash bonus opportunity of any Company Employee with an annual salary or consulting fees in excess of $250,000 as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increaseenter into, establish, adopt, amend, or terminate any material Company Benefit Plan, (C) take any action to accelerate the vesting or lapsing of restrictions or payment of, the or funding of compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or under any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company SubsidiaryBenefit Plan, (D) hire or promote any employee at or to the level engage any independent contractor (who is a natural person) with an annual salary or consulting fees in excess of Vice President or above, $250,000 or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (executive officer other than for cause); except, in each case, for: (1) amendments cause or due to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President death or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiariesdisability;
(xvii) settle or compromise any litigationsell, claimassign, suitexclusively license, action or proceedingabandon, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protectionIntellectual Property, other than in the ordinary course of business in a manner consistent with past practice;
(xxixviii) take or cause to be taken any actionother than as required by applicable Law, or knowingly fail to take or cause to be taken any actionbecome a party to, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result establish, adopt, amend, commence participation in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement collective bargaining or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).similar labor union Contract;
(bxix) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) fail to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business keep current and in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirementsfull force and effect, or (D) as expressly permitted to comply with the requirements of, or required by this Agreementto apply for or renew, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s Permit, approval, authorization, consent, license, registration or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid certificate issued by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities Governmental Entity that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets is material to the conduct of the business of the Company and the Company its Subsidiaries, taken as a whole, except in each case, ;
(1xx) acquisitions by Parent from file any wholly owned Parent Subsidiary prospectus supplement or among registration statement or consummate any wholly owned Parent Subsidiaries; (2) offering of securities that requires registration under the purchase of equipment, supplies and inventory Securities Act or that includes any actual or contingent commitment to register such securities under the Securities Act in the ordinary course future;
(xxi) fail to maintain, cancel or materially change coverage under, in a manner materially detrimental to the Company or any of businessits Subsidiaries, any insurance policy maintained with respect to the Company and its Subsidiaries and their assets and properties;
(xxii) enter into any material new line of business outside of the business currently conducted by the Company and its Subsidiaries as of the date of this Agreement; or
(3xxiii) inbound licenses agree or other grants or assignments authorize to do any of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of Except as otherwise (w) required by this Agreement, except (1x) to the extent Parent shall otherwise give its prior consent required by applicable Law, (y) approved in writing by Parent (such consent approval not to be unreasonably withheld, conditioned delayed or delayed), conditioned) or (2z) as set forth in on Section 4.1(a6.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirementsafter the date of this Agreement and prior to the Effective Time, or (4) as expressly required by this Agreementthe Company will, and will cause its Subsidiaries to, use its and their reasonable best efforts to conduct their businesses in the ordinary course and, to the extent consistent therewith, the Company shall, and shall cause the Company its Subsidiaries to, use its and their commercially reasonable efforts to conduct preserve their business organizations intact (including the service of key employees) and maintain existing relations with key customers, suppliers and other Persons with whom the Company and its Subsidiaries have significant business in the ordinary course of businessrelationships; provided provided, however, that any no action expressly permitted by the remaining provisions Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 6.1(b) shall be deemed a breach of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not sentence unless such action would constitute a violation breach of the foregoing. During the period from the date such other provision of this Agreement through the earlier of the Closing or the termination of Section 6.1(b).
(b) Except as otherwise (w) required by this Agreement, except (Ax) to the extent Parent shall otherwise give its prior consent required by applicable Law, (y) approved in writing by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned delayed or delayed), conditioned) or (Bz) as set forth in on Section 4.1(a6.1(b) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by from the date of this AgreementAgreement until the Effective Time, the Company shall will not, and will cause its Subsidiaries not (and shall not permit any Company Subsidiary to)::
(i) amend (x) adopt any change in the certificate of incorporation or bylaws of the Company’s Organizational Documents , or amend (y) adopt any change in the Organizational Documents comparable organizational document of any Subsidiary of the Company Subsidiarythat, in the case of this clause (y), would adversely affect the consummation of the Merger or the other transactions contemplated by this Agreement;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate the Company or any of its Subsidiaries, changein each case other than any such transactions among any wholly-owned Subsidiaries of the Company which would not reasonably be expected to result in a restriction or reduction in any participation exemption available under non-U.S. Law with respect to any such Subsidiaries;
(iii) (A) acquire or license tangible or intangible assets outside of the ordinary course of business or (B) make any capital contributions to or investments in any Person, exchangein the case of clauses (A) and (B), amend other than any such transactions (I) among the terms Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries or (II) for amounts that do not exceed $200,000,000 in the aggregate in any fiscal year of the Company (in the case of clause (A), determined based upon the greater of the fair market value of the assets so acquired by the Company and its Subsidiaries or reclassify the fair market value of the consideration paid by the Company and its Subsidiaries);
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber any shares of the Company’s capital stock or other equity interests of the Company or any of its Subsidiaries, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, restricted shares, restricted share units, performance share units, stock appreciation rights, phantom stock or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, in each case, other than (A) any such transaction among the Company Subsidiaryand its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries or (B) any issuance, sale, grant or transfer of Shares pursuant to the settlement of Company Options, Company SARs, Company RSUs, Company PSUs or Company Awards outstanding as of the date of this Agreement or granted after the date of this Agreement not in violation of this Agreement;
(iiiv) make any loans, advances or guarantees outside the ordinary course of business, other than any such transactions (I) among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, (II) permitted under Section 6.1(b)(viii) or (III) not in excess of $25,000,000 in the aggregate in any fiscal year of the Company;
(vi) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock (except for (A) dividends or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly wholly-owned Subsidiary of the Company Subsidiary to the Company or another wholly to any other wholly-owned Subsidiary of the Company Subsidiaryand except for any quarterly dividends to stockholders of the Company by the Company in an amount not to exceed $0.54 per Share, in each case declared and paid at such times and in such amounts as is consistent with historical practice over the most recent fiscal year ended prior to the date of this Agreement and (B) dividend equivalents paid in respect of Company RSUs, Company PSUs or Company Awards outstanding as of the date of this Agreement or granted thereafter in accordance with the terms of this Agreement, in each case, in accordance with their terms);
(ivvii) acquire reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for (A) any other Personsuch transaction by a wholly-owned Subsidiary of the Company and (B) acquisitions of Shares in satisfaction of withholding obligations or payment of the exercise price in respect of Company Options, Company SARs, Company RSUs, Company PSUs or Company Awards outstanding as of the date of this Agreement pursuant to its terms or granted thereafter not in violation of this Agreement);
(viii) incur any Indebtedness, except for (A) intercompany Indebtedness among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, (B) Indebtedness not to exceed $1,500,000,000 in aggregate principal amount incurred to replace, renew, extend, refinance or refund any equity interest in any other Person existing Indebtedness of the Company, which Indebtedness is (I) prepayable without premium or penalty (other than investments customary LIBOR breakage amounts) or (II) on terms that (x) taken as a whole, are substantially consistent with or not more restrictive than those contained in equity securities that constitute short term investments that are accounted the Indebtedness being replaced, renewed, extended, refinanced or refunded and (y) permit parent guarantees and parent company reporting to be substituted for as cash equivalents)Company reporting, (C) Indebtedness under commercial paper arrangements, revolving credit facilities and other working capital or liquidity facilities not to exceed $3,500,000,000 in aggregate principal amount at any business or division of another Persontime outstanding pursuant to this subclause (C), or (D) guarantees of Indebtedness of the Company or its wholly-owned Subsidiaries outstanding on the date hereof or otherwise incurred in compliance with this Section 6.1(b), (E) Indebtedness of the Subsidiaries of the Company organized under the laws of a country other than the United States in an aggregate principal amount (for all such Subsidiaries, taken together) not to exceed $500,000,000 at any material assets excepttime outstanding pursuant to this subclause (E), (F) Indebtedness pursuant to receivables financing or factoring arrangements (but in any event for which the factoring balance does not exceed $2,400,000,000 at any time outstanding (it being understood that this clause (viii)(F) and clause (xv)(D), taken together, permit a factoring balance that does not exceed $2,400,000,000)), (G) Indebtedness pursuant to capitalized leases (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory entered into in the ordinary course of business or (32) inbound licenses or entered into in connection with the Arizona Greenhouse project, (H) Indebtedness in respect of swaps, options, derivatives and other grants or assignments of Intellectual Property hedging Contracts entered into in the ordinary course of business, (I) Indebtedness under letters of credit, bank guarantee arrangements and any related reimbursement obligations entered into in the ordinary course of business or (J) Indebtedness not to exceed $250,000,000 in aggregate principal amount that may be incurred other than in accordance with subclauses (A) through (I) inclusive;
1 Note (ix) (A) make or authorize any payment of, or accrual or commitment for, capital expenditures that, in the aggregate, exceed by more than 5%, or (B) fail to W&S: Subject make payments of capital expenditures that, in the aggregate, are no less than 90%, in the case of each of clauses (A) and (B), of the aggregate amounts set forth in Section 6.1(b)(ix) of the Company Disclosure Schedule (the “Capex Budget”) for the respective periods set forth therein, except with respect to ongoing review acquisitions or licenses of tangible or intangible assets permitted by the Company.clause (II) of Section 6.1(b)(iii);
(vx) except other than in the ordinary course of business or in connection with any transaction between matter to the extent such matter is expressly permitted by any other clause of this Section 6.1(b), (A) enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement or (B) terminate or waive, or materially amend, modify or supplement, any rights or interests pursuant to or in any Material Contract, other than expirations of any such Contract in accordance with the terms of such Contract;
(xi) enter into any Contract that (x) materially restricts the ability of the Company or any of its Subsidiaries (or, following the consummation of the Merger, would materially restrict the ability of the Surviving Corporation or its Affiliates) to compete in any business or geographic area, or (y) grants “most favored nation” status that, following the consummation of the Merger, would be material to the Company or the crop science business of Parent and would apply to Parent, the Company or any wholly owned of their respective Subsidiaries;
(xii) make any material changes with respect to financial accounting policies or procedures, except as required by Law, proposed Law or by U.S. GAAP or statutory or regulatory accounting rules or interpretations with respect thereto or by any Governmental Entity or quasi-governmental authority (including the Financial Accounting Standards Board or any similar organization);
(xiii) settle any action, suit, claim, hearing, arbitration, investigation or other proceedings (other than any audit or other proceeding in respect of Taxes), in each case made or pending against the Company Subsidiary or among any wholly owned of its Subsidiaries (and not including any settlement with respect to matters in which any of them is a plaintiff) for an amount in excess of $150,000,000 in the aggregate in any fiscal year of the Company or on a basis that would result in the imposition of any writ, judgment, decree, settlement, award, injunction or similar order of any Governmental Entity that, in the aggregate, would materially restrict the future activity or conduct of Parent, the Company or any of their respective Subsidiaries, issueother than with respect to monetary settlements only, settlements or compromises of any action, suit, claim, hearing, arbitration, investigation or other proceedings to the extent reflected or reserved against in the balance sheet (or the notes thereto) of the Company included in the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2016 for an amount not in excess of the amount so reflected or reserved;
(A) file or amend any material Tax Return (other than in the ordinary course of business), (B) settle or compromise any material Tax liability for an amount materially in excess of the amount reserved or accrued on the Company’s most recent consolidated balance sheet included in the Company Reports, (C) make, change or revoke any material Tax election (other than an entity classification election under Treasury Regulation Section 301.7701-3 in respect of any Subsidiary that is not material), (D) change any material method of Tax accounting or (E) terminate, consent to the termination of or agree to any material modification of any ruling or agreement listed in Section 5.1(n)(iii) of the Company Disclosure Schedule (or that would be necessary to be listed therein in order to prevent a breach of Section 5.1(n)(iii)) if such action is reasonably expected to result in a material increase in the Tax liability of the Company or any of its Subsidiaries;
(xv) transfer, sell, grant or otherwise permit to become outstanding any additional shares oflease, or securities convertible or exchangeable fordivest, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, cancel or otherwise dispose of any assets (by mergerother than Intellectual Property Rights, consolidationGermplasm, operation of law, division or otherwise), any material Company IP or material tangible assets Biological Materials) of the CompanyCompany or any of its Subsidiaries, except for transfers, sales, leases, divestments, cancellations or other than: dispositions (A) sales of inventory, goods or products and services in the ordinary course of business in a manner consistent with past practice or business, (B) of obsolete inventory and equipment in the ordinary course of business, (C) of tangible assets having a net present value not in excess of $35,000,000 individually or $60,000,000 in the aggregate in any fiscal year of the Company (it being understood that the net present value of such assets shall count against the thresholds set forth in Section 6.1(b)(xvi)(IV)), (D) of receivables, invoices and related rights and assets pursuant to receivables financing or factoring arrangements (but in any event for which the factoring balance does not exceed $2,400,000,000 at any time outstanding (it being understood that this clause (xv)(D) and clause (viii)(F), taken together, permit a factoring balance that does not exceed $2,400,000,000)) and (E) among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries;
(xvi) (A) transfer, sell, license, mortgage, pledge, encumber, divest or otherwise dispose of any Intellectual Property Rights, Germplasm or Biological Materials or (B) except in the ordinary course of business, grant, extend, amend, fail to diligently prosecute or cancel, abandon or allow to lapse (in each case, except as required in the diligent prosecution of Registered Intellectual Property), waive or modify, as applicable, any rights in or to material Owned Intellectual Property, Germplasm or Biological Materials, except, in the case of each of clauses (A) and (B), for (I) non-exclusive licenses of Intellectual Property Rights, Germplasm or Biological Materials in the ordinary course of business, (II) exclusive licenses of Intellectual Property Rights, Germplasm or Biological Materials in the ordinary course of business, provided such licenses are not exclusive in all fields of use, and provided, further, that such licenses retain the Company’s rights to offer or develop products or services that the Company is offering or developing or planning to offer or develop, as the case may be, at any time from the date hereof and through the Effective Time, (III) transfers, sales, licenses, mortgages, pledges, encumbrances, divestments and other dispositions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries and (IV) transfers, sales, licenses, divestments or other dispositions of Intellectual Property Rights, Germplasm or Biological Materials having a net present value not in excess of $35,000,000 individually or $60,000,000 in the aggregate in any fiscal year of the Company (it being understood that the net present value of such Intellectual Property Rights, Germplasm or Biological Materials shall count against the thresholds set forth in Section 6.1(b)(xv)(C));
(xvii) except as required by Contracts or Benefit Plans, (A) terminate, adopt, establish, enter into, materially amend or renew (or communicate any intention to take such action) any material Benefit Plan, (B) increase in any manner the compensation, benefits, severance or termination pay of any of the current or former directors, officers, employees or consultants who are natural persons of the Company or its Subsidiaries, other than routine annual salary or base pay increases (and corresponding increases in bonus or incentive payments to the extent determined by reference to salary or base pay) for non-executive officer employees, in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or , (C) as security for pay any borrowings permitted by Section 4.1(a)(viii); bonus or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchaseincentive compensation under any Benefit Plan, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws payments based on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness actual performance for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C)completed performance periods, (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting of or payment oflapsing of restrictions, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessvesting require
Appears in 1 contract
Sources: Merger Agreement (Monsanto Co /New/)
Interim Operations. 1
(a) The Company agrees and Parent, each covenant and agree as to itself and its Subsidiaries that, during the period from after the date of this Agreement through and prior to the earlier of the Closing Effective Time (unless Parent or the termination of this AgreementCompany, except (1) to the extent Parent as applicable, shall otherwise give its prior consent approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayed)), its business and its Subsidiaries’ businesses shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates and keep available the services of its and its Subsidiaries’ present officers, employees and agents, except as (1) otherwise expressly contemplated or required by this Agreement, (2) as required by applicable Law or (3) set forth in on Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3) as may be required by applicable Legal Requirementsit relates to the Company and its Subsidiaries, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this on Section 4.1(a) (including Section 4.1(a6.1(a) of the Company Parent Disclosure Schedule) will not constitute a violation Letter, as it relates to Parent and its Subsidiaries. Without limiting the generality of and in furtherance of the foregoing. During the period , from the date of this Agreement through until the earlier of the Closing Effective Time, except as (A) required or the termination of expressly contemplated by this Agreement, except (AB) other than (I) with respect to the extent restrictions set forth in Sections 6.1(a)(i), 6.1(a)(ii), 6.1(a)(iv), 6.1(a)(vii), 6.1(a)(viii), 6.1(a)(ix), 6.1(a)(x) and 6.1(a)(xi) in each case with respect to the Company and (II) with respect to Section 6.1(a)(vii) with respect to Spectra Energy Partners, LP, as contemplated by the Company CapEx Plan, or as may be necessary to execute capital projects consistent with the Company CapEx Plan, or required by the terms of any Material Contract set forth on Section 4.2(t) of the Company Disclosure Letter or any Material Contract filed as an exhibit to the Company’s Reports as of the date hereof, in each case as it relates to the Company and its Subsidiaries, (C) other than (I) with respect to the restrictions set forth in Sections 6.1(a)(i), 6.1(a)(ii), 6.1(a)(iv), 6.1(a)(vii), 6.1(a)(viii), 6.1(a)(ix), 6.1(a)(x) and 6.1(a)(xi) in each case with respect to Parent shall otherwise give and (II) with respect to Section 6.1(a)(vii) with respect to Enbridge Income Fund, Enbridge Energy Partners, L.P. and Midcoast Energy Partners, L.P., as contemplated by the Parent CapEx Plan, or as may be necessary to execute capital projects consistent with the Parent CapEx Plan, or required by the terms of any Material Contract set forth on Section 4.2(t) of the Parent Disclosure Letter or any Material Contract filed as an exhibit to Parent’s Reports as of the date hereof, in each case as it relates to Parent and its prior consent Subsidiaries, (D) required by applicable Law, (E) required by any Benefit Plan or collective bargaining agreement, (F) as approved in writing by the Company or Parent (in the case of subsections as applicable) (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent approval not to be unreasonably withheld, conditioned or delayed), ) or (BG) as set forth in on Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (C) as may be required by applicable Legal Requirementsit relates to the Company and its Subsidiaries, or (Don Section 6.1(a) of the Parent Disclosure Letter, as expressly required by this Agreementit relates to Parent and its Subsidiaries, the Company shall each Party, on its own account, will not (and shall will cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend its certificate or articles of incorporation or bylaws or comparable governing documents other than amendments that solely effect ministerial changes to such documents and that would not adversely affect the Company’s Organizational Documents consummation of the Merger or amend the Organizational Documents of any Company Subsidiaryother transactions contemplated by this Agreement;
(ii) splitexcept for any transactions among or solely involving a Party’s wholly owned Subsidiaries or among wholly owned Subsidiaries of a Party’s Subsidiaries, combinemerge or consolidate itself or any of its Subsidiaries with any other Person, subdivideor restructure, changereorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its material assets, exchangeoperations or businesses;
(iii) acquire assets or businesses, amend whether by merger, consolidation, purchase or otherwise, from any other Person with a fair market value or purchase price in excess of $150,000,000 individually or $300,000,000 in the terms aggregate in any transaction or series of related transactions, other than (A) acquisitions of assets in the ordinary course of business or reclassify any shares of the Company’s capital stock (B) transactions solely between or other equity interests of among (x) (1) the Company and any of its wholly owned Subsidiaries or (2) wholly owned Subsidiaries of a Company Subsidiary and such Company Subsidiary or (y) (1) Parent and any Company of its wholly owned Subsidiaries or (2) wholly owned Subsidiaries of a Parent Subsidiary and such Parent Subsidiary;
(iiiiv) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, or otherwise enter into any Contract or understanding with respect to the voting of, any shares of its capital stock (or equity interests) or of any of its Subsidiaries (other than the issuance of shares (or equity interests) (A) by any of its wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries or by any wholly owned Subsidiaries of a Party’s Subsidiary to such Subsidiary or another wholly owned Subsidiary of such Subsidiary or (B) in respect of equity-based awards outstanding as of the date of this Agreement or subsequently issued in accordance with this Agreement, in each case in accordance with their terms and the plan documents), or securities convertible or exchangeable into or exercisable for any shares of such capital stock (or equity interests), or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(v) create or incur any encumbrance on any assets of such Party or any of its Subsidiaries having a value in excess of $50,000,000 individually or $200,000,000 in the aggregate that is not incurred in the ordinary course of business on any such assets of such Party or any of its Subsidiaries;
(vi) except in the ordinary course of business, make any loans, advances, guarantees or capital contributions to or investments in any Person (other than (A) to or from the Company and any of its wholly owned Subsidiaries or to or from any wholly owned Subsidiaries of a Subsidiary of the Company and such Subsidiary or (B) to or from Parent and any of its wholly owned Subsidiaries or to or from any wholly owned Subsidiaries of a Subsidiary of Parent and such Subsidiary, as applicable) in excess of $20,000,000 individually or $80,000,000 in the aggregate;
(vii) (x) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, interests other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods dividends or services in the ordinary course of business in distributions by a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries Subsidiary or among any by a wholly owned Company Subsidiaries (and guarantees by the Company Subsidiary of a Subsidiary to another wholly owned Subsidiary or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix)such Subsidiary, (B) increase, dividends or accelerate distributions required under the vesting or payment of, the compensation or benefits applicable organizational documents of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if entity in effect on the date of this Agreement, would constitute a Material Contract;
(xiC) change regular cash dividends made by Parent or any of its methods Subsidiaries with customary record and payment dates not in excess of financial accounting the amounts for the applicable entity set forth in Section 6.1 of the Parent Disclosure Letter, and (D) regular cash dividends made by the Company or accounting practices its Subsidiaries with customary record and payment dates not in excess of the amounts for the applicable entity set forth in Section 6.1 of the Company Disclosure Letter or (y) modify in any material respect other than as required by changes in GAAPits dividend policy;
(xiiviii) make reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock (except or equity interests) or securities convertible or exchangeable into or exercisable for elections made any shares of its capital stock (or equity interests), other than with respect to (A) the capital stock or other equity interests of a wholly owned Subsidiary of the Company or Parent, as applicable, (B) the acquisition of shares of Company Common Stock or Parent Common Stock by the Company or Parent, respectively, that are tendered by holders of equity-based awards to satisfy the obligations to pay the exercise price or Tax withholding obligations with respect to such awards, and (C) the acquisition by the Company or Parent of equity-based awards in connection with the forfeiture of such awards;
(ix) sell, “drop-down”, transfer, lease, divest or otherwise dispose of, whether by merger, consolidation, sale or otherwise, any assets, business or a division of any business with a value in excess of $150,000,000 individually or $300,000,000 in the aggregate, other than (A) transactions solely between or among (x) the Company and any of its wholly owned Subsidiaries or (y) Parent and any of its wholly owned Subsidiaries, (B) in connection with services provided in the ordinary course of business, or (C) sales of obsolete assets;
(x) incur any Indebtedness (including the issuance of any debt securities, warrants or other rights to acquire any debt security), except for (A) Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $250,000,000 individually or $500,000,000 in the aggregate, (B) Indebtedness in replacement of existing Indebtedness for borrowed money on terms substantially consistent with or more favorable to Parent than the Indebtedness being replaced, (C) guarantees of Indebtedness of its wholly owned Subsidiaries otherwise incurred in compliance with this Section 6.1(a)(x) or (D) Indebtedness incurred by Parent owed to any of its wholly owned Subsidiaries or by any of Parent’s wholly owned Subsidiaries and owed to Parent or any of its wholly owned Subsidiaries, or by the Company owed to any of its wholly owned Subsidiaries or by any of the Company’s wholly owned Subsidiaries and owed to the Company or any of its wholly owned Subsidiaries;
(xi) except to the extent not exceeding the amount provided by the Company capital expenditure plan set forth in Section 6.1(a)(xi) of the Company Disclosure Letter (the “Company CapEx Plan”), as it relates to the Company, or Parent’s capital expenditures plan set forth in Section 6.1(a)(xi) of the Parent Disclosure Letter (the “Parent CapEx Plan”), as it relates to Parent, make or authorize any payment of, or accrual or commitment for, capital expenditures, except (A) any such expenditure to the extent reasonably necessary to avoid a material business interruption as a result of any act of God, war, terrorism, earthquake, fire, hurricane, storm, flood, civil disturbance, explosion, partial or entire failure of utilities or information technology systems, or any other similar cause not reasonably within the control of such Party or its Subsidiaries, or (B) expenditures that the Company or Parent reasonably determines are necessary to maintain the safety and integrity of any asset or property in response to any unanticipated and subsequently discovered events, occurrences or developments (provided that the Company or Parent, as applicable, will use its reasonable best efforts to consult with the other Party prior to making or agreeing to any such capital expenditure);
(xii) other than in the ordinary course of business, (A) enter into any Contract (other than any Contract that is expressly permitted or contemplated to be entered into by this Agreement) that would have been a Material Contract had it been entered into prior to this Agreement, (B) materially amend, modify, supplement, waive, terminate, assign, convey or otherwise transfer, in whole or in part, any Material Contract, or (C) forgive, compromise, cancel, modify or waive any debts or claims held by it or waive any rights having in each case of this clause (C) a value in excess of $100,000,000 individually or $300,000,000 in the aggregate;
(xiii) other than in the ordinary course of business, settle any action, suit, claim, hearing, arbitration, investigation or other proceedings for an amount in excess of $75,000,000 individually or $150,000,000 in the aggregate or any obligation or liability of it in excess of such amount or on a basis that would result in the imposition of any writ, judgment, decree, settlement, award, injunction or similar order of any Governmental Entity that would restrict in a material respect the future activity or conduct of such Party or any of its Subsidiaries;
(xiv) make any changes with respect to financial accounting policies or procedures, except as required by GAAP (or any interpretation thereof), including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization, or Law, including pursuant to SEC rule or policy;
(xv) other than in the ordinary course of business, make, change or revoke any material Tax election, adopt or change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a accounting method, file any material amended Tax Return, settle any material Tax liabilityclaim, settle or compromise any material liability for Taxes or any Tax audit, claimassessment or dispute for an amount materially in excess of the amount reserved or accrued on such Party’s most recent consolidated balance sheet included in such Party’s Reports, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business or in accordance with the terms and regular expiration thereof, terminate or permit any material Company Permit (in the case of the Company) or Parent Permit (in the case of Parent) to lapse or fail to apply on a manner timely basis (subject to any cure periods) for any renewal of any renewable material Company Permit (in the case of the Company) or Parent Permit (in the case of Parent);
(xvii) other than in the ordinary course of business or on account of changes in the insurance industry generally in the United States or Canada, make or agree to any material changes to be made to any insurance policies so as to materially affect the insurance coverage of the Party or its Subsidiaries or assets following the Effective Time;
(xviii) increase or change the compensation or benefits payable to any Employee other than in the ordinary course of business and consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any actionexcept that, which action or failure to act would reasonably be expected to notwithstanding the foregoing, neither Party shall (A) prevent grant any new long-term incentive or equity-based awards, or amend or modify the Merger from qualifying terms of any such outstanding awards, under any Company Benefit Plan or Parent Benefit Plan, as a reorganization within the meaning of Section 368(a) of the Code or applicable, (B) result in grant any transaction or retention bonuses, (C) increase or change the compensation or benefits payable to any executive officer, (D) pay annual bonuses, other than for completed periods based on actual performance through the end of the conditions applicable performance period, or (E) increase or change the severance terms applicable to the Mergers set forth in ARTICLE V not being satisfiedany Employee; or
(xxiixix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the foregoing actions described in prohibited by clauses (i) through (xxixvi) of this Section 4.1(a6.1(a).
(b) Parent agrees that, during the period from From the date of this Agreement through until the earlier of the Closing or Effective Time and the termination of this Agreement in accordance with Article VIII, Parent and the Company shall not take or permit any of their respective Subsidiaries to take or agree to take any action that would reasonably be expected to prevent, materially impair or materially delay the consummation of the Merger.
(c) Notwithstanding anything to the contrary in this Agreement, except a Party’s obligations under Section 6.1(a) to take an action or not to take an action, or to cause its Subsidiaries to take an action or not to take an action, shall, with respect to any entities (1and their respective subsidiaries) controlled by such Party, or in which such Party otherwise has a voting interest, but that are not wholly owned Subsidiaries of such Party or have public equity holders, only apply (i) to the extent permitted by the Company shall otherwise give organizational documents and governance arrangements of such entity and its prior consent in writing (such consent not to be withheld, conditioned or delayed)subsidiaries, (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (Aii) to the extent the Company shall otherwise give a Party is authorized and empowered to bind such entity and its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (subsidiaries and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid permitted by any wholly owned Parent Subsidiary to Parent the Party’s or another wholly owned Parent Subsidiary;
its Subsidiaries’ duties (iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture fiduciary or otherwise) (A) to such entity and its subsidiaries or any other Person, (B) any of its equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesshol
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) hereof and prior to the extent Effective Time (unless Parent shall otherwise give its prior consent in writing (such any request for consent not to be unreasonably withheldconsidered by Parent in good faith and responded to within one (1) Business Day) or except as otherwise required by applicable Law or with respect to the transactions and commitments contemplated by this Agreement and the Arrangement) that the business of the Company and its Subsidiaries shall be conducted in the ordinary and usual course, conditioned and, to the extent consistent therewith, the Company and each of its Subsidiaries shall use its respective reasonable efforts to preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, licensors, licensees, lessors, employees and business associates. Without limiting the generality of the foregoing, the Company covenants and agrees as to itself and its Subsidiaries that, after the date hereof and prior to the Effective Time (unless Parent shall otherwise consent in writing (any request for consent to be considered by Parent in good faith and responded to within one (1) Business Day) or delayed), (2) except as set forth otherwise required by applicable Law or with respect to the transactions and commitments contemplated by this Agreement and the Arrangement or unless disclosed in Section 4.1(a3.1(a) of the Company Disclosure ScheduleLetter), (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, neither the Company nor any of its Subsidiaries shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to)::
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iiiA) declare, set aside, make aside or pay any dividend dividends on, or make any other distribution distributions (whether payable in cash, stock or property) with in respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock shares or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(viB) except in connection with any transaction between the Company and any wholly owned Company Subsidiary split, combine or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on reclassify any of its material tangible property shares or tangible assetsissue or authorize the issuance of any other securities in respect of, except in lieu of or in substitution for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; its shares or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchasepurchase, redeem or otherwise acquire any of its shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities thereof or obligations convertible (currently any rights, warrants or after options to acquire any such shares or other securities, except for purchases, redemptions or other acquisitions of its shares or other securities required under the passage terms of time any plans, arrangements or Contracts existing on the occurrence date hereof between the Company or any of certain events) into its Subsidiaries and any director, officer, employee or exchangeable for any shares consultant of the Company’s Company or any Company Subsidiary’s capital stock or equity interests, except: of its Subsidiaries;
(ii) (A) issue, deliver, sell, grant, pledge, dispose of or otherwise encumber any of its shares, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares or voting securities, or any rights, warrants or options to acquire any such convertible securities (other than the issuance of Company Common Stock repurchased from employees Shares upon the exercise of Company Options outstanding on the date hereof or consultants or former employees or consultants pursuant to Company RSUs outstanding on the date hereof, in each case in accordance with their terms on the date hereof without any action by the Company to accelerate the vesting of the Company pursuant to the exercise of repurchase Options or Company RSUs), or any “phantom” stock, “phantom” stock rights, stock appreciation rights existing prior to the date of this Agreement; or stock based performance units, or (B) shares amend any term of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms any outstanding security of the applicable awardCompany or its Subsidiaries;
(iii) adopt or propose any change to its Organizational Documents;
(iv) directly or indirectly acquire or agree to acquire (i) by merging or consolidating with, or by purchasing assets or stock of, or by any other manner, any Person or division, business or equity interest of any Person or (ii) any assets which, individually have a purchase price in excess of $15,000,000 or, in the aggregate, have a purchase price in excess of $15,000,000, except for capital expenditures (which are subject to paragraph (viii) incur below) and purchases of raw materials, supplies and other inventory items in the ordinary and usual course of business;
(v) other than draws on existing revolving loansproducts sold to customers in the ordinary and usual course of business (without limitation as to dollar amount) or otherwise in the ordinary and usual course of business and not in an aggregate amount of more than $5,000,000, transfer, lease, license, guarantee, sell, dispose of or subject to any Lien any other property or assets (including share capital of any of its Subsidiaries), redeem, repurchase, prepay ;
(other than prepayments of revolving loans), defease, vi) incur or cancel modify any indebtedness for borrowed money, money or guarantee any such indebtednessindebtedness of another Person, issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directlyof the Company or any of its Subsidiaries, contingently or otherwise) or make guarantee any loans or capital contributions to any other debt securities of another Person, except for 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, other than (A) indebtedness among existing solely between the Company and its wholly owned Company Subsidiaries or among between such wholly owned Subsidiaries or (B) indebtedness in an aggregate amount less than $2,500,000;
(vii) make any loan, advance, or capital contribution to or investment in any Person other than loans in the ordinary and usual course of business and advances or capital contributions to or investments in any wholly owned Company Subsidiaries Subsidiary in the ordinary and usual course of business;
(and guarantees by the Company viii) make or the Company Subsidiaries authorize or commit for any capital expenditures or any obligations or liabilities in respect thereof);
(ix) (A) adoptpay, terminate discharge, settle or amend satisfy any Company Plan except to the extent permitted by clauses claims, liabilities, obligations or litigation (Babsolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in the ordinary and usual course of business or in accordance with their terms, of liabilities disclosed, reflected or reserved against in the most recent consolidated financial statements (C), or the notes thereto) of the Company included in the Company Reports (Dfor amounts not in excess of such reserves) or (E) incurred since the date of this Section 4.1(a)(ix)such financial statements in the ordinary and usual course of business, (B) increasecancel any indebtedness, (C) waive or assign any claims or rights of substantial value or (D) except as permitted by Section 3.2, waive any benefits of, fail to enforce, or accelerate the vesting or payment of, the compensation or benefits of agree to modify in any member of the Company Board, current employeerespect, or former employee of consent to any matter with respect to which consent is required under (x) any standstill or similar agreements to which the Company or any Company Subsidiaryof its Subsidiaries is a party or (y) other than in the ordinary and usual course of business consistent with past practice, (C) grant any rights confidentiality or similar agreements to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of which the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in its Subsidiaries is a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleparty;
(x) except in the ordinary course of businessmaterially modify, (i)(A) materially amend or terminate (except for terminations pursuant to the expiration of the existing term of any Company Material Contract) any Material Contract or (B) , waive, release or assign any material rights under any Material Contractsor claims thereunder, or (ii) enter into any Contract or agreement that(other than purchase orders in the ordinary and usual course of business), that if it had been entered in effect on prior to the date of this Agreementhereof, would constitute be a Company Material Contract;
(xi) change sell, transfer or out-license to any Person or otherwise extend, amend, modify, abandon, or make part of the public domain any rights to the material Intellectual Property Rights owned by the Company or its methods of financial accounting or accounting practices in any material respect Subsidiaries, other than pursuant to (i) confidentiality agreements entered into in the ordinary and usual course of business containing customary terms that do not impose any obligations on the Company or its Subsidiaries other than those relating to the treatment of confidential information and (ii) any Contracts currently in place (that have been disclosed in writing to Parent prior to the date hereof) in accordance with their terms as required by changes in GAAPof the date hereof;
(xii) enter into any Contract that both (A) either provides for aggregate payments to or receipt by the Company in excess of $2,500,000, relates to a material product or material Intellectual Property Rights of the Company or is otherwise material to the Company, and (B) contains any restriction on the ability of the Company or any of its Subsidiaries to assign its rights, interests or obligations thereunder, unless such restriction would not preclude any assignment to Parent or any of its Subsidiaries following the consummation of the Arrangement;
(xiii) except as required to ensure that any Employee Plan is not then out of compliance with applicable Law or to comply with any Company Compensation and Benefit Plan entered into prior to the date hereof, (A) adopt, enter into, terminate or amend any collective bargaining agreement or any Employee Plan, (B) increase in any manner the compensation, bonus or fringe or other benefits of, or pay any bonus of any kind or amount whatsoever to, any current or former director, officer, employee or consultant, (C) pay any benefit or amount not required under any Employee Plan, (D) grant or pay any severance or termination pay or increase in any manner the severance or termination pay of any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries, (E) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement, or any Employee Plan (including the grant of Company Equity Awards, “phantom” stock, “phantom” stock rights, stock based or stock related awards, performance units or the removal of existing restrictions in any Employee Plan or awards made thereunder), (F) amend or modify any Company Equity Awards, (G) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, Contract or arrangement or Employee Plan, (H) take any action to accelerate the vesting or payment of any compensation or benefit under any Employee Plan or (I) materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company Pension Plan or change the manner in which contributions to any Company Pension Plan are made or the basis on which such contributions are determined;
(xiv) except as required by Canadian GAAP or, for purposes of any reconciliation to US GAAP, by US GAAP, make (except for elections made any change in accounting methods, principles or practices, or write up, write down or write off the book value of any assets, individually or in the ordinary course of business), change or revoke aggregate;
(xv) make any material Tax electionelection or settle or compromise any material liability for Taxes, change any Tax accounting period or material any method of Tax accountingaccounting (except as required by applicable Law), amend file any amended material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of TaxesReturn, enter into any closing agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a any material Tax liability, request any Tax ruling from any Governmental EntityTax, surrender any right to claim a material refund of TaxesTax refund, or, other than in the ordinary course of business, agree or consent to an any extension or waiver of the statute of limitations with respect period applicable to a any material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company Tax claim or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersassessment;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) liquidation, dissolution, merger, consolidation, division, restructuring, or recapitalization or other a plan of reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise take any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheetthat would, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would could reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) to, result in any of the conditions to the Mergers set forth in ARTICLE V Article IV not being satisfied; or
(xxiixviii) authorize, approve authorize or enter into any agreement or otherwise make any commitment to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent covenants and agrees as to itself and its Subsidiaries that, during the period from after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) hereof and prior to the extent Effective Time (unless the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned and except as otherwise required by applicable Law or delayed), (2) as expressly set forth in this Agreement or the corresponding subsection of Section 4.1(b3.1(b) of the Parent Disclosure ScheduleLetter), (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, neither Parent nor any of its Subsidiaries shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to)::
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make aside or pay any dividend dividends (other than intercompany dividends) on, or make any other distribution distributions (whether payable in cash, stock or property) with in respect to of, any shares of Parent’s its capital stock, or split, combine or reclassify any of its capital stock or issue or authorize the capital stock or other equity interest issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock;
(ii) in the case of Parent Subsidiaryonly, other than dividends adopt or distributions only propose any change to the extent paid by any wholly owned Parent Subsidiary to Parent its Organizational Documents;
(iii) adopt a plan of complete or another wholly owned Parent Subsidiarypartial liquidation, dissolution, or recapitalization or a plan of reorganization;
(iv) acquire (by mergertake any action that would, consolidationor that could reasonably be expected to, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest result in any other Person of the conditions set forth in Article IV not being satisfied; or
(other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (Cv) authorize or enter into any business agreement or division otherwise make any commitment to do any of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
Except (ai) The Company agrees that, during the period from the date of this Agreement through the earlier as set forth in Section 5.1 of the Closing Company Disclosure Schedule, (ii) as required or the termination of expressly permitted by this Agreement, except including under the second sentence of this Section 5.1, (1iii) to as required by applicable Law or (iv) with the extent prior written consent of Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), from the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with Article VII (2the “Interim Period”), the Company will, and will cause each of its Subsidiaries to, conduct the business of the Company and its Subsidiaries in the Ordinary Course of Business. In addition, and without limiting the generality of the foregoing, except (i) as set forth in Section 4.1(a) 5.1 of the Company Disclosure Schedule, (3ii) as may be required by applicable Legal Requirements, or (4) as expressly required permitted by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted (iii) as required by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing applicable Law or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), ) with the prior written consent of Parent (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of during the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementInterim Period, the Company shall not (will not, and shall will not permit any Company Subsidiary of its Subsidiaries to):, do any of the following:
(a) (i) amend declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property or any combination thereof) in respect of any Shares or capital stock or other equity interests, other than (1) dividends and other distributions by a direct or indirect Subsidiary to its parent in the Ordinary Course of Business, (2) dividends or other distributions by an entity in which the Company directly or indirectly owns at least a majority interest, in the Ordinary Course of Business, and (3) if applicable and upon consultation with Parent, to the extent reasonably necessary to maintain the Company’s Organizational Documents or amend qualification as a REIT and to avoid the Organizational Documents imposition of any Company Subsidiary;
entity-level income and excise taxes; (ii) split, combine, subdivide, change, exchange, amend the terms of subdivide or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
its Subsidiaries; or (iii) declarerepurchase, set asideredeem or otherwise acquire, make directly or pay indirectly, any dividend Shares or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest interests of any the Company Subsidiaryor its Subsidiaries, other than dividends the withholding of Shares to satisfy withholding Tax obligations with respect to Shares granted pursuant to Company Equity Awards and forfeitures of Company Equity Awards;
(b) except as required by Section 5.19, issue, deliver, sell, grant, pledge or distributions only otherwise encumber or subject to the extent paid any Lien (other than Liens imposed by applicable securities Laws) any wholly owned Company Subsidiary to shares of capital stock of the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests its Subsidiaries or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable forinto, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into exercisable or exchangeable for any shares of the Company’s such capital stock, or any Company Subsidiary’s rights, warrants or options to acquire any shares of such capital stock or equity interestssuch convertible or exchangeable securities, except: in each case;
(Ac) shares of Company Common Stock repurchased from employees except as required by Section 5.19, amend, supplement or consultants or former employees or consultants modify, the Organizational Documents of the Company pursuant or any of its Subsidiaries;
(d) make or adopt a material change in its accounting methods, principles or practices, except insofar as may be required by GAAP, applicable Law or statutory or regulatory accounting rules or interpretations with respect thereto or by any Governmental Authority (including the Financial Accounting Standards Board or any similar organization);
(e) except in relation to the exercise Liens to secure Indebtedness for borrowed money permitted to be incurred under Section 5.1(f), sell, lease (as lessor), license, mortgage, sell and leaseback or otherwise subject to any Lien (other than Permitted Liens), or otherwise dispose of repurchase rights existing prior to the date of this Agreement; any properties or assets (Bincluding Company Owned Property) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicableany interests therein, in accordance each case, with an aggregate value or purchase price in excess of $100,000 individually or $250,000 in the aggregate, in any transaction or series of related transactions, except that the Company and its Subsidiaries may continue to lease Company Owned Properties in the Ordinary Course of Business;
(f) incur, create, assume, refinance, replace or prepay any Indebtedness for borrowed money or guarantee such Indebtedness of another Person, or issue, sell or amend the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities of the Company or its Subsidiaries, other than (directlyi) the incurrence of Indebtedness for borrowed money in the Ordinary Course of Business under, contingently and in accordance with, the Existing Loan Agreements, as in effect as of the date hereof, (ii) intercompany Indebtedness or otherwise) guarantees between or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and any of its wholly owned Company Subsidiaries that will be satisfied or among any wholly owned Company Subsidiaries discharged as of the Closing or (and guarantees by iii) in connection with the Company or financing of accounts payable in the Company Subsidiaries in respect thereof)Ordinary Course of Business;
(ixg) (A) adopt, terminate or amend any Company Plan except to the extent other than as permitted by clauses (B), (C), (D) or (E) under another subsection of this Section 4.1(a)(ix)5.1, (Bi) increasematerially modify, amend or waive any material right or Action under or renew any Material Contract or (ii) enter into any new Contract that would constitute a Material Contract if existing on the date hereof;
(h) (i) enter into any Contract with any current or prospective director, employee, consultant or independent contractor, (ii) accelerate the vesting or payment of, or increase the amount of, the compensation or benefits of with respect to any member of the Company Board, current or former employee, consultant or former employee independent contractor of the Company or its Subsidiaries, other than (A) the payment of annual bonuses for completed periods in the Ordinary Course of Business or (B) as required by any Company Subsidiary, (C) grant any rights to severance, retention, change Benefit Plan in control or termination pay to any member effect as of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring or as otherwise required by any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of businessapplicable Law, (i)(Aiii) adopt, materially amend or terminate any Company Benefit Plan (except for terminations pursuant to the expiration of the existing term of or any Material Contract) any Material plan, program, policy, arrangement, Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, understanding that would be a Company Benefit Plan if it were in effect existence on the date of this Agreement), would constitute a Material Contractexcept as required by applicable Law, (iv) grant any awards under any Company Benefit Plan, or (v) hire or engage, or terminate (other than for cause) the employment or engagement of any officer, employee, consultant or independent contractor;
(xii) change any of its methods of financial accounting or accounting practices in any material respect other than except as required by changes in GAAP;
applicable Law or, following consultation with Parent, to qualify or preserve the status of any of the Company’s Subsidiaries as a disregarded entity or partnership for United States federal income tax purposes or as a taxable REIT subsidiary within the meaning of Section 856(l) of the Code, as the case may be, (xiii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax electionelection with respect to Taxes, (ii) make a material change in any Tax accounting period method (or material method of Tax accountingfile a request to make any such change), amend (iii) file any material amended Tax Return if (and, in the case of filing any such amendment would reasonably be expected Tax Return as required by applicable Law prior to result the Closing, the Company shall provide drafts of each such Tax Return and supporting documents to Parent for its review and comment at least five (5) Business Days prior to the date on which the Company will file such Tax Return and shall consider in a material Tax liabilitygood faith any reasonable comments timely submitted by Parent), (iv) settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, (v) surrender any right to claim a material refund of TaxesTax refund, oroffset or credit, other than in the ordinary course of business, agree to an extension (vi) waive or waiver of extend the statute of limitations with respect to a any material amount Tax, other than pursuant to extensions of time to file Tax Returns obtained in the Ordinary Course of Business, or (vii) enter into any Tax protection agreement or any closing agreement with respect to Taxes;
(xiiij) other than consignment of Company Products settle or compromise (i) any Action, in the ordinary course of business, make each case made or pending against any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)Properties, except that the Company or any Company Subsidiary may make of the Subsidiaries, excluding any Non-Budgeted Capital Expenditure thatsuch matter relating to Taxes (which is covered by Section 5.1(i) above), when added to all other Non-Budgeted Capital Expenditures made or (ii) any Action involving any present, former or purported holder or group of holders of the Shares, in each case, in their capacity as such, where the amount paid by the Company or any of its Subsidiaries in settlement exceeds $100,000 individually or is not settled solely by the payment of money damages and does not provide a full release of the Company and its Subsidiaries;
(k) enter into any new line of business;
(l) adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization;
(m) remove any material personal property owned or leased by the Company or any of its Subsidiaries since from its Company Property except as may be required for necessary repair or replacement or as permitted by Section 5.1(f) above;
(n) initiate any Tax protest with respect to any Company Property;
(o) settle, agree to, or otherwise acquiesce to any condemnation or taking of all or any portion of a Company Owned Property;
(p) make any capital expenditures in an amount exceeding $20,000 at a single Company Property or $150,000 in the aggregate in any period of thirty (30) consecutive days between the date of this Agreement would notand the Effective Time, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement to obligate the Company or any of its Subsidiaries to make any commitment such capital expenditures; or
(q) agree to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing actions.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (KBS Strategic Opportunity REIT, Inc.)
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through and continuing until the earlier of the Closing or the termination of Closing:
(a) The Shareholder agrees (except as expressly contemplated by this Agreement, except (A) including any Exhibits and Schedules hereto, or to the extent Parent that Buyer shall otherwise give its prior consent in writing writing) that as to the Company:
(1) The Company shall carry on its business in the case usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts to preserve intact its present business organization, keep available the services of subsections its present officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it;
(iv)2) The Company shall not and shall not propose to: (a) declare, (vi)set aside or pay any dividend, (viii)on, (ix)or make other distributions in respect of, (x)any of its capital stock, (xii), (xiii), and (xvii) or purchase or redeem any shares of this Section 4.1(a), such consent not its capital stock other than a cash dividend to be unreasonably withheld, conditioned or delayed), (B) as set forth distributed to the Shareholder in Section 4.1(a) an amount equal to the Shareholder's liability for federal and state taxes on the earnings from operations of the Company Disclosure Schedule, during 1998 through the Closing Date (Cexclusive -26- 34 of any income or gain on sale associated with the transactions covered by this Agreement) as may be required by applicable Legal Requirementsmore fully described at Section 5.4 hereafter; (b) split, combine or reclassify any of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock; (c) redeem, repurchase or otherwise acquire any shares of its capital stock; or (Dd) otherwise change its capitalization.
(3) Except as expressly required contemplated by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiariessell, issue, sellpledge, grant authorize or otherwise permit to become outstanding any additional shares propose the sale or issuance of, pledge or securities convertible purchase or exchangeable for, or options, warrants or rights to acquirepropose the purchase of, any shares of its capital stock of any class or securities convertible into, or rights, warrants or options to acquire, any such shares or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;convertible securities.
(vi4) except in connection with any transaction between the The Company and any wholly owned shall not amend its certificate of incorporation or its Bylaws.
(5) The Company Subsidiary or among any wholly owned Company Subsidiaries, shall not sell, assignlease, transferpledge, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, encumber or otherwise dispose of (by mergeror agree to sell, consolidationlease, operation of lawpledge, division encumber or otherwise)otherwise dispose of, any of its assets that are material Company IP or material tangible any other assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets except in the ordinary course of business consistent with past practice; prior practice and in no event amounting in the aggregate to more than $25,000.
(B6) pursuant to written Contracts The Company shall not incur any indebtedness for borrowed money or commitments existing as guarantee any such indebtedness or issue or sell any debt securities of the date Company or guarantee any debt securities of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or others other third parties than in the ordinary course of business in a manner consistent with past practice;prior practice and in no event amounting in the aggregate to more than $25,000.
(vii7) directly The Company shall not adopt or indirectly repurchaseamend in any material respect any collective bargaining agreement or Employee Benefit Plan.
(8) The Company shall not grant to any executive officer any increase in compensation or in severance or termination pay, redeem or otherwise enter into any employment agreement with any executive officer.
(9) The Company shall not acquire any shares (by merger, consolidation or acquisition of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently assets or otherwise) any corporation, partnership or other business organization or subdivision thereof, or make any loans investment by either purchase of stock or capital securities, contributions to any other Personcapital, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adoptproperty transfer or, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term purchase of any Material Contractproperty or assets, of any other individual or entity.
(10) any Material Contract or (B) waive, release or assign The Company shall not make any material rights under any Material Contracts, tax election or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes federal, state, local or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax foreign tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;.
(xiii11) other than consignment The Company shall not waive, release, grant or transfer any rights of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company material value or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements modify or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business change in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, Material Contract other than in the ordinary course of business in a manner and consistent with past practice;.
(xxi12) The Company shall not enter into any agreement or arrangement to do any of the foregoing. The Company shall not take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure that is reasonably likely to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to representations and warranties of the Mergers Company set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into this Agreement becoming untrue in any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)material respect.
(b) Parent Buyer agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, (except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required contemplated by this Agreement, Parent shallincluding any Exhibits and Schedules hereto, and or to the extent that the Shareholder shall cause otherwise consent in writing or to the Parent Subsidiaries to, use commercially reasonable efforts extent required to conduct permit Buyer to meet its obligations under this Section 5) that:
(1) Buyer shall carry on its business in the usual, regular and ordinary course of business. Parent agrees thatin substantially the same manner as heretofore conducted and, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent consistent with such business, use all reasonable efforts to preserve intact its present business organization (provided that such obligation shall not relate to the Company shall otherwise give officers and employees of Buyer or any of its prior consent subsidiaries) and preserve its relationships with customers, suppliers and others having business dealings with it.
(2) As part of its overall business strategy, Buyer is presently in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as negotiations with other companies that may be required by applicable Legal Requirementssuitable acquisition targets. Buyer may, therefore, make one or more acquisitions prior to the Closing, and in connection therewith, may be caused to issue additional securities, of whatever nature and number, in connection with such acquisitions. In addition, Buyer may also be caused to issue additional securities, of whatever nature and number, in connection with certain private placement transactions which may be undertaken between the date hereof and the Closing.
(D3) as expressly permitted or required by this Agreement, Parent Buyer shall not (and shall not permit propose to) (a) declare or pay any Parent Subsidiary to):
dividend, on, or make other distributions in respect of, any of its capital stock, (i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(iib) split, combine, subdivide, change, exchange, amend the terms of combine or reclassify any shares of Parent’s its capital stock or issue, authorize or propose the issuance of any other equity interests securities in respect of, in lieu of the Companyor in substitution for shares of its capital stock, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iiic) declare, set aside, make repurchase or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to otherwise acquire any shares of Parent’s its capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;(d) otherwise change its capitalization.
(iv4) acquire (by mergerBuyer shall not sell, consolidationlease, operation pledge, encumber or otherwise dispose of, or agree to sell, lease, pledge, encumber or otherwise dispose of, any of lawits assets that are material, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; business consistent with prior practice.
(35) inbound licenses Buyer shall not adopt or other grants amend in any material respect any collective bargaining agreement or assignments Employee Benefit Plan (as defined herein).
(6) Buyer shall not enter into any agreement or arrangement to do any of Intellectual Property the foregoing. Buyer shall not take any action, or fail to take any action, that is reasonably likely to result in the ordinary course any of businesstheir representations and warranties set forth in this Agreement becoming untrue in any material respect.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through and until the Effective Time or the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2w) as set forth in Section 4.1(a5.1(a) of the Company Disclosure ScheduleLetter, (3x) as may expressly contemplated by this Agreement, (y) to the extent consented to in writing by Parent (which consent, in the cases of the matters set forth in subclauses (ii), (ix), (xi), (xiii), (xvi), (xix) and (xx) (solely in respect of agreements, authorizations or commitments in respect of the immediately foregoing subclauses) below shall not be unreasonably withheld, delayed or conditioned, and, in all other cases, shall be in Parent’s sole discretion) or (z) as required by applicable Legal Requirements, or (4) as expressly required by this AgreementLaw, the Company shall, and shall cause the Company each of its Subsidiaries to, use commercially reasonable efforts to conduct its business operations in all material respects in the ordinary course of business; provided that any action expressly permitted by business and it shall, and shall cause each of its Subsidiaries to, use its respective commercially reasonable efforts to maintain existing relations with Governmental Entities, customers, suppliers, manufacturers, distributors and partners. Notwithstanding the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation generality of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) but subject to the extent Parent shall otherwise give its prior consent exceptions set forth in writing clauses (in the case of subsections (iv), (vi), (viii), (ixw), (x), (xii), (xiii), y) and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(az) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementimmediately preceding sentence, the Company shall not (and shall not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents its certificate of incorporation, bylaws or amend the Organizational Documents of any Company Subsidiarycomparable governing documents;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests stock or assets, formation of a joint venture assets or otherwise) any corporation, partnership or other business organization or any property, rights or assets outside of the ordinary course of business for consideration that exceeds, individually or in the aggregate, $1.0 million from any other Person in any transaction or series of related transactions, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement that have been made available to Parent prior to the date of this Agreement;
(iii) except for (A) any other Personadvances of expenses and trade credit, in each case in the ordinary course of business, (B) in connection with any equity interest Transaction Litigation or (C) in a manner consistent with the Company’s indemnification obligations set forth in its certificate of incorporation or bylaws, make any loans, advances or capital contributions to, or investments in, any other Person (other than investments any wholly owned Subsidiary of the Company);
(iv) make, authorize or incur any capital expenditure in equity securities that constitute short term investments that are accounted for as cash equivalentsexcess of the amounts set forth in Section 5.1(a)(iv) of the Company Disclosure Letter;
(v) merge or consolidate with any other Person or restructure, reorganize or completely or partially liquidate the Company or any of its Subsidiaries (other than with respect to any merger or consolidation among the Company and any wholly owned Subsidiary of the Company or among wholly owned Subsidiaries of the Company);
(vi) issue, sell, pledge, dispose of, grant, transfer, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any Equity Interests of the Company or any of its Subsidiaries, except issuances or dispositions of (CA) any business Shares in respect of Stock Options, Stock Appreciation Rights and RSUs outstanding on the date of this Agreement under the Company Plans or division (B) Shares or options or rights to acquire Shares in connection with grants or awards of another Personstock based compensation made in accordance with Section 5.1(a)(xii) hereof;
(vii) declare, set aside, establish a record date for, or pay any dividends on or make any other distributions (Dwhether payable in cash, stock, property or a combination thereof) in respect of any material assets exceptof the capital stock, (1) acquisitions by the Company other than any dividends from any wholly owned Subsidiary of the Company Subsidiary to the Company or among any to another wholly owned Subsidiary of the Company;
(viii) reclassify, split, combine, subdivide, repurchase, redeem or otherwise acquire, directly or indirectly, any of the Equity Interests, except for repurchases, redemptions or acquisitions in connection with the exercise, vesting, settlement or forfeiture of Stock Options, Stock Appreciation Rights and RSUs under Company Plans;
(ix) except in connection with the repayment of the Credit Facility at or prior to the Closing or any voluntary repayment of borrowings under the Credit Facility, (A) incur or issue any Indebtedness for borrowed money, or assume, voluntarily prepay, defease, cancel, acquire, guarantee or endorse, or otherwise become responsible for (whether directly or indirectly, contingently or otherwise), the Indebtedness of any Person, (B) issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its Subsidiaries or (C) assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person for borrowed money (in each case, for the avoidance of doubt, excluding trade payables, capitalized lease obligations, or obligations issued or assumed as consideration for services or property, including inventory), except for (1) Indebtedness incurred under the Credit Agreement, dated as of May 5, 2015, by and among the Company, certain of its Subsidiaries; , as borrowers, Bank of America, N.A., as agent for the lenders and the other lenders, guarantors and agents party thereto (the “Credit Facility”), (2) letters of credit issued pursuant to the purchase Credit Facility or otherwise issued in the ordinary course of equipmentbusiness, supplies (3) interest rate, foreign currency and inventory other hedging arrangements on customary commercial terms entered into in the ordinary course of business or and (34) inbound licenses or other grants or assignments of Intellectual Property Intercompany Indebtedness incurred in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(vx) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding incur any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestsLien, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(viA) except in connection with any transaction between Permitted Encumbrances; (B) pledges or deposits by the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services Subsidiaries in the ordinary course of business under workmen’s compensation Laws, unemployment insurance Laws or similar Laws; (C) good faith deposits in connection with Contracts (other than for the payment of Indebtedness) to which the Company or one of its Subsidiaries is a manner party, in each case, in the ordinary course of business; (D) Liens that may be incurred or granted pursuant to or in accordance with the terms of any Indebtedness in effect as of the date hereof, securing any Indebtedness permitted pursuant to Section 5.1(a)(ix), or (E) pursuant to licenses or sublicenses of Intellectual Property granted in the ordinary course of business;
(xi) engage in any transaction, or series of similar transactions, agreements, arrangements or understandings, that is of a type that would be required to be disclosed in the Company SEC Documents pursuant to Item 404 of Regulation S-K, other than (A) as permitted pursuant to Sections 5.1(a)(xii) or 5.9, or (B) in the ordinary course of business and on terms, taken as a whole, no less favorable to the Company than terms that could have been obtained from an unaffiliated third party;
(xii) except as required pursuant to the existing terms of any Company Plan, Employment Agreement or another agreement in effect prior to the date of this Agreement, or as required by applicable Law, (A) grant, pay or agree to pay any severance or termination payments or any benefits to any current or former director or officer of the Company or any of its Subsidiaries, except in the case of employees who are not executive officers of the Company, in the ordinary course of business consistent with past practice and consistent with the Company’s existing severance plans and policies, (B) increase the compensation or bonus (or grant, pay or agree to pay bonuses) or other benefits to any current or former director, officer or employee of obsolete equipment the Company or assets any of its Subsidiaries, except in the case of employees who are not executive officers of the Company, immaterial increases in compensation in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or , (C) as security for increase pensions or welfare benefits of any borrowings permitted by Section 4.1(a)(viii); current or former director, officer or employee of the Company or any of its Subsidiaries, (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchaseestablish, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or materially amend any Company Plan except to or Employment Agreement, or enter into any new, or amend any existing, change in control arrangements or retention, retirement or similar agreements with any new, current or former director, officer or employee of the extent permitted by clauses (B)Company or any of its Subsidiaries, (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, waive or materially amend any performance or vesting criteria or accelerate the vesting or payment of, the or take action to fund, any compensation payable or benefits of payable or provided to any member of the Company Board, current employee, or former director, officer or employee of the Company or any Company Subsidiaryof its Subsidiaries, except as expressly provided in this Agreement, (CF) grant enter into any rights to severancenew, retentionor amend any existing, change in control or termination pay to employment agreements with any member of the Company Boardnew, current employee or former director, officer or employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to of its Subsidiaries except in the level case of Vice President or above, or (E) terminate the employment of any employee employees who are not executive officers of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptCompany, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., practice and with an annual base salary and incentive compensation opportunity not to exceed $200,000, (G) terminate any executive officer other than for cause or wage rates and target annual cash bonus opportunitiesfor performance reasons (in each case, as reasonably determined by the Company) (in amounts which case the Company shall promptly notify Parent) or hire or promote any executive officer, or (H) grant or make any equity awards that are may be settled in Shares, preferred shares, or any Equity Interest or any other securities of the Company or any of its Subsidiaries, or the value of which is linked directly or indirectly, in whole or in part, to the price or value of any Shares, preferred shares, Equity Interests or other Company securities or Subsidiary securities;
(xiii) other than in the ordinary course of business (A) make or change any material Tax election, (B) change the Company’s or any of its Subsidiaries’ method of accounting for Tax purposes, (C) file any amended Tax Return that would result in a manner consistent material change in Tax liability, taxable income or loss, (D) settle, concede, compromise or abandon any material Tax claim or assessment, (E) surrender any right to a refund of material Taxes or (F) consent to any extension or waiver of the limitation period applicable to any claim or assessment with past practice; and respect to material Taxes;
(6xiv) except as required by GAAP, a Governmental Entity or applicable Law, make any other actions set forth in Section 4.1(a)(ixmaterial changes to accounting policies or principles;
(xv) transfer, sell, lease, license, assign, mortgage, pledge, divest or otherwise dispose of any entity or assets, product lines, rights or businesses of the Company Disclosure Schedule;
or its Subsidiaries, including capital stock of any of its Subsidiaries having a value in excess of $1.0 million in the aggregate, other than (xA) except machinery, equipment, inventory, supplies, materials and other assets (including, without limitation, Intellectual Property) in the ordinary course of business, (i)(AB) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if Contracts in effect on prior to the date of this AgreementAgreement that have been made available to Parent prior to the date of this Agreement or (C) pursuant to the Contracts listed in Section 5.1(a)(xv) of the Company Disclosure Letter;
(xvi) enter into, materially amend or modify, transfer, assign, license, encumber or terminate, or waive any material term under, any Company Material Contract or Material Real Property Lease or any Contract that would constitute a Company Material ContractContract or Material Real Property Lease if entered into prior to the date hereof (other than the expiration or renewal of any of the foregoing Contracts in accordance with its terms);
(xixvii) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business)accordance with Section 5.17, change or revoke any material Tax electionwaive, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityrelease, settle or compromise any material liability for Taxes pending or any Tax auditthreatened litigation, claimarbitration, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the (excluding ordinary course of business, agree to an extension disputes with vendors in which no litigation or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiiiarbitration commences) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that or action against the Company or any Company Subsidiary may make of its Subsidiaries other than settlements or compromises of any Non-Budgeted Capital Expenditure thatlitigation, when added to all other Non-Budgeted Capital Expenditures made arbitration, claim or action where the amount paid in an individual settlement or compromise by the Company (and not including any amount paid by the Company Subsidiaries since the date of this Agreement would not, in the aggregate, Company’s insurance carriers or third parties) does not exceed the aggregate CapEx Budget by more than $100,000500,000;
(xivxviii) except as expressly required by applicable Legal Requirements enter into or amend any agreement or arrangement with any broker or finder in connection with the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated herebyMerger Transactions;
(xvxix) adopt a budget of the Company for the fiscal year ending December 31, 2016 that is different from the draft 2016 budget that the Company has made available to Parent, or make any amendment thereto; or
(xx) agree, authorize or commit to do any of the foregoing actions or enter into any agreement, understanding letter of intent (binding or non-binding) or similar agreement or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees thatshall, during the period from and after the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) and prior to the extent Effective Time (unless Parent shall otherwise give its prior consent approve in writing (writing, with such consent approval not to be unreasonably withheld, conditioned or delayed), (2) and except as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) otherwise expressly required by this Agreement or as may be required by applicable Legal RequirementsLaw, or (4) conduct its business in the Ordinary Course of Business and, to the extent consistent therewith, shall use reasonable best efforts to, preserve its business organization intact and maintain satisfactory relations and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and business associates and keep available the services of its present employees and agents. Without limiting the generality of and in furtherance of the foregoing sentence, from the date of this Agreement until the Effective Time, except as otherwise expressly required by this Agreement, the Company shallrequired by applicable Law, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted required by the remaining provisions express terms of this Section 4.1(a) (including Section 4.1(a) of the any Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementMaterial Contract made available to Parent, except (A) to the extent Parent shall otherwise give its prior consent as approved in writing by Parent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), with such consent approval not to be unreasonably withheld, conditioned or delayed), (B) as or set forth in the corresponding subsection of Section 4.1(a8.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this AgreementLetter, the Company shall not (and shall not permit any Company Subsidiary to):not:
(i) amend the Company’s adopt or propose any change in its Organizational Documents or amend the Organizational Documents of any Company SubsidiaryDocuments;
(ii) splitform, combineincorporate or organize any Subsidiaries;
(iii) merge or consolidate the Company with any other Person or restructure, subdividereorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, changeoperations or businesses;
(iv) acquire assets from any other Person, exchangeother than acquisitions of goods in the Ordinary Course of Business or assets valuing less than $100,000 individually or $250,000 in the aggregate;
(v) issue, amend sell, pledge, dispose of, grant, transfer, lease, license, guarantee, Encumber, or otherwise enter into any Contract or understanding with respect to the terms of or reclassify voting of, any shares of capital stock of the Company’s , securities convertible or exchangeable into or exercisable for any such shares of capital stock, or any options, warrants or other rights of any kind to acquire any such shares of capital stock or such convertible or exchangeable securities (other equity interests than (A) the Support Agreement and (B) the issuance of shares of capital stock in respect of Company Equity Awards outstanding as of the date of this Agreement or issued after the date of this Agreement in accordance with Section 8.1(a)(xxiv), in each case in accordance with their terms and, as applicable, the Incentive Plans as in effect on the date of this Agreement;
(vi) enter into any Contracts or other arrangements between the Company, on the one hand, and any director or executive officer of the Company or any Person beneficially owning five percent or more of the outstanding Shares or shares of common stock of any of their respective Affiliates, on the other hand, except for compensatory arrangements consistent with Section 8.1(a)(xxiv) or entered into in the Ordinary Course of Business with Company SubsidiaryEmployees consistent with Section 8.1(a)(xxiv) and transactions with Parent or its Affiliates;
(iiivii) create or incur any Encumbrance that is not incurred in the Ordinary Course of Business on any assets of the Company;
(viii) make any loans, advances, guarantees or capital contributions in excess of $50,000 to or investments in any Person;
(ix) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of its capital stock (including with respect to the Company’s capital stock or , for the capital stock or other equity interest avoidance of any Company Subsidiarydoubt, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiaryShares);
(ivx) acquire (by mergerreclassify, consolidationsplit, operation of lawcombine, acquisition of stocksubdivide or redeem, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its capital stock or securities convertible or exchangeable for, into or options, warrants or rights to acquire, exercisable for any shares of its capital stock stock;
(xi) incur any Indebtedness (including the issuance of any debt securities, warrants or other equity interestsrights to acquire any debt security) in excess of $50,000;
(xii) enter into any Contract that would have been a Company Material Contract had it been entered into prior to this Agreement, other than shares Contracts entered into in the Ordinary Course of Company Common Stock issuable upon exercise of outstanding Company OptionsBusiness with payment obligations not to exceed $100,000;
(vixiii) except other than with respect to Company Material Contracts related to Indebtedness, which shall be governed by Section 8.1(a)(xi), terminate or amend, modify, supplement or waive in connection with any transaction between the Company and any wholly owned Company Subsidiary material respect, or among any wholly owned Company Subsidiaries, sell, assign, convey, Encumber or otherwise transfer, lease in whole or license in part, rights or interest pursuant to or in any third party, or incur any Lien on any of its material tangible property or tangible assetsCompany Material Contract, except for (x) expirations of any such Contract in the Ordinary Course of Business and in accordance with the terms of such Contract with no further action by the Company Permitted Encumbrancesor other party to such Contract, except for any ministerial actions, (y) non-exclusive licenses under Intellectual Property Rights owned or otherwise dispose of (purported to be owned by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: in each case, granted in the Ordinary Course of Business or (Az) sales of inventoryterminations, goods amendments, modifications, assignments, conveyances, transfers or expirations where, concurrent therewith, the Company enters into a replacement Contract providing substantially similar property, products or services on substantially similar terms;
(xiv) cancel, modify or waive any debts or claims held by the Company in excess of $100,000 or waive any material rights;
(xv) except as expressly provided for by Section 8.11, amend, modify, terminate, cancel or let lapse an Insurance Policy, unless simultaneous with such termination, cancellation or lapse, replacement self-insurance programs are established by the ordinary course Company or replacement policies underwritten by insurance and reinsurance companies of business nationally recognized standing are in a manner consistent with past practice full force and effect, in each case, providing coverage equal to or of obsolete equipment greater than the coverage under the terminated, canceled or assets lapsed Insurance Policies for substantially similar premiums, as applicable, as in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing effect as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viixvi) directly or indirectly repurchaseother than with respect to Transaction Litigation, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interestswhich shall be governed by Section 8.15, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or and settlement of Company Optionstrade accounts payable in the Ordinary Course of Business, as applicable, settle or compromise any Proceeding for an amount in accordance with excess of $100,000 individually or $250,000 in the terms of the applicable awardaggregate;
(viiixvii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in changes with respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee legal structure of the Company or any Company Subsidiaryto their accounting policies or procedures, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in applicable Law or GAAP;
(xiixviii) enter into any line of business in any geographic area other than the existing lines of business of the Company and lines of products and services reasonably ancillary to any existing line of business, in any geographic area for which a License (if one is required) authorizing the conduct of such business, product or service in such geographic area is held by it, or, except as currently conducted, engage in the conduct of any business in any jurisdiction that would require the receipt or transfer of any License issued by any Governmental Entity;
(xix) make any material changes to the existing lines of business of the Company or adopt or make any material modifications to the Company’s strategic plan;
(except for elections made in the ordinary course of business)xx) make, change or revoke any material Tax election, change an annual Tax accounting period, adopt or change any Tax accounting period or material method of Tax accountingmethod, amend file any amended material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of TaxesReturn, enter into any closing agreement with a Governmental Entity relating respect to Taxes if such agreement would reasonably be expected to result in a Taxes, settle any material Tax liabilityclaim, request any Tax ruling from any Governmental Entityaudit, assessment or dispute, surrender any right to claim a material refund or take any action which would be reasonably expected to result in an increase in the Tax liability of Taxesthe Company, or, other than in respect of any taxable period (or portion thereof) ending after the Closing Date, the Tax liability of Parent or its Affiliates;
(xxi) transfer, sell, lease, divest, cancel, allow to lapse or expire, or otherwise dispose of or transfer, or permit or suffer to exist the creation of any Encumbrance upon, any material assets (tangible or intangible, including any Intellectual Property Rights), Licenses, product lines or businesses of the Company, except in connection with services provided in the ordinary course Ordinary Course of businessBusiness or sales of obsolete assets;
(xxii) cancel, agree abandon or otherwise allow to an extension lapse or waiver expire any Company Intellectual Property Rights, except in the Ordinary Course of the statute of limitations Business with respect to a Intellectual Property Rights that are not material amount to any business of Taxesthe Company;
(xiiixxiii) other than consignment amend or fail to comply with the Privacy and Security Policies, or alter the operation or security of Company Products any IT Assets owned, used or held for use in the ordinary course operation of the Company’s business, make in each case, in a manner that would be less protective of any capital expenditure IT Assets, Personal Information or any other confidential or proprietary information that is not contemplated in the Company’s possession or control, including any information stored on or processed by such IT Assets;
(xxiv) except as required pursuant to the capital expenditure budget (terms of any Company Benefit Plan in effect as of the “CapEx Budget”) date of this Agreement and set forth in Section 4.1(a)(xiii8.1(a)(xxiv) of the Company Disclosure Schedule Letter, (A) increase in any manner the compensation or fees, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any Company Employee, (B) become a “Non-Budgeted Capital Expenditure”)party to, except that the establish, adopt, amend, commence participation in or terminate any Company Benefit Plan or any arrangement that would have been a Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added Benefit Plan had it been entered into prior to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would notAgreement, except in connection with annual renewals or as required to comply with applicable Law, (C) grant any new awards, or amend or modify the aggregateterms of any outstanding awards, exceed the aggregate CapEx Budget by more than $100,000;
under any Company Benefit Plan, (xivD) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (Aprovided on Section 5.3(a)(i) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including Disclosure Letter, take any voting trust)action to accelerate the vesting or lapsing of restrictions or payment, other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or fund or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) way secure the payment, discharge of compensation or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or benefits under any Company Subsidiary (other than confidentiality obligations)Benefit Plan, (yE) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability change any actuarial or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail other assumptions used to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due calculate funding obligations with respect to any material Company Registered IP Benefit Plan that is required by applicable Law to be funded or otherwise abandonchange the manner in which contributions to such plans are made or the basis on which such contributions are determined, cancelexcept as may be required by GAAP, (F) forgive any loans or permit make any extensions of credit in the form of a personal loan to lapse any material Company Registered IP, Employee (other than in its reasonable business judgment or routine travel advances issued in the ordinary course Ordinary Course of business Business), (G) hire any employee or engage any independent contractor (who is a natural person) with an annual salary or wage rate or consulting fees and target cash bonus opportunity in a manner consistent with past practice, excess of $100,000 or (BH) authorize terminate the disclosure to any third party employment of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, executive officer other than in the ordinary course of business in a manner consistent with past practicefor cause;
(xxixxv) become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, labor organization, works council or similar organization;
(xxvi) fail to maintain policies and procedures designed to ensure compliance with the FCPA and Other Anti-Bribery Laws;
(xxvii) fail to maintain policies and procedures designed to ensure compliance with the Export and Sanctions Regulations in each jurisdiction in which the Company operates or is otherwise subject to jurisdiction;
(xxviii) take any action or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would that is reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Merger set forth in ARTICLE V Article IX not being satisfied; or
(xxiixxix) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as Nothing set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through shall give Parent, directly or indirectly, the earlier of right to control or direct the Closing or the termination of this Agreement, except (A) Company’s operations prior to the extent Effective Time or give the Company shall otherwise give its prior consent in writingCompany, (B) as set forth in Section 4.1(b) of directly or indirectly, the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, right to control or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend direct the Parent’s or either of the Acquisition Subsits Subsidiaries’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect operations prior to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessEffective Time.
Appears in 1 contract
Sources: Merger Agreement (Cafepress Inc.)
Interim Operations. (1
(a) The Company agrees that, during the period from after the date of this Agreement through and prior to the earlier of the Closing or Merger 1 Effective Time and the termination of this AgreementAgreement in accordance with its terms, except (1w) to the extent unless Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2x) except as otherwise expressly permitted by this Agreement, (y) except as required by applicable Laws, or (z) except as set forth in Section 4.1(a5.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this AgreementLetter, the Company business of it and its Subsidiaries shall be conducted in the Ordinary Course of Business, and, to the extent consistent therewith, it shall, and it shall cause the Company its Subsidiaries to, use its and their respective commercially reasonable efforts to conduct its preserve their business organizations, preserve their assets and properties in good repair and condition and preserve their relationships with those persons having significant business dealings with them to the ordinary course end that their good will and ongoing businesses shall be unimpaired at the Closing. Without limiting the generality of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation and in furtherance of the foregoing. During the period , from the date of this Agreement through until the earlier of the Closing or Merger 1 Effective Time and the termination of this AgreementAgreement in accordance with its terms, except (AX) to the extent as otherwise expressly permitted by this Agreement, (Y) as Parent shall otherwise give its prior may consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned delayed or delayedconditioned), or (BZ) as set forth in Section 4.1(a5.1(a) of the Company Disclosure ScheduleLetter, it will not and will not permit its Subsidiaries to:
(a) adopt or propose any change in the Company’s articles of incorporation or bylaws or the organizational documents of any of the Company’s Subsidiaries;
(b) merge or consolidate itself or any of its Subsidiaries with any other Person, except for any such transactions among its wholly-owned Subsidiaries and except in connection with any transaction in accordance with Section 5.1(a)(xiii), or restructure, reorganize or completely or partially liquidate;
(c) other than (A) in connection with the exercise or settlement of Company Equity Awards, (B) as permitted by Section 5.1(a)(xi), or (C) as may be required by applicable Legal Requirementsdisclosed in Section 5.1(a)(xi) of the Company Disclosure Letter, issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of its capital stock or of any of its Subsidiaries (D) as expressly required other than the issuance of shares by this Agreementits wholly-owned Subsidiary to it or another of its wholly-owned Subsidiaries), the Company shall not (and shall not permit or securities convertible or exchangeable into or exercisable for any Company Subsidiary to):
shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, other than (i) amend grants of Company Equity Awards to new hires in the Company’s Organizational Documents Ordinary Course of Business or amend (ii) grants of Company Equity Awards up to $100,000, in the Organizational Documents of any Company Subsidiaryaggregate, to non-executive officer employees;
(iid) splitmake any loans, combineadvances or capital contributions to or investments in any Person (other than between itself and any of its direct or indirect Subsidiaries), subdivide, change, exchange, amend other than advances to employees in the terms Ordinary Course of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company SubsidiaryBusiness;
(iiie) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any of its capital stock (except for dividends paid by any direct or indirect wholly-owned Subsidiary to it or to any other direct or indirect wholly-owned Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(f) other than in connection with tax withholdings related to a Company Equity Award, reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of the Company’s capital stock or securities convertible or exchangeable into or exercisable for any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiarystock;
(ivg) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests incur any indebtedness or assets, formation of a joint venture or otherwise) (A) guarantee any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division indebtedness of another Person, or (D) issue or sell any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary debt securities or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses warrants or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on acquire any of its material tangible property debt securities or tangible assetsof any of its Subsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales guarantees incurred in compliance with this Section 5.1(a) by it of inventoryindebtedness of its wholly-owned Subsidiaries, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner interest rate swaps on customary commercial terms consistent with past practice;
(viih) directly except as may be required as a result of a change in applicable Law or indirectly repurchase, redeem GAAP or otherwise acquire any shares of as required by the Company’s auditors or accountants, make any changes with respect to accounting policies or procedures;
(i) except as may be required as a result of a change in applicable Law, make, change or revoke any material Tax election, material method of Tax accounting or any Company Subsidiary’s annual Tax accounting period;
(j) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse (except with respect to patents expiring in accordance with their terms) or expire or otherwise dispose of any of its material assets, product lines or businesses or of its Subsidiaries, including capital stock or equity interestsof any of its Subsidiaries, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: except (A) shares in connection with services and products provided in the Ordinary Course of Company Common Stock repurchased from employees or consultants or former employees or consultants Business and sales of the Company obsolete assets, (B) Liens securing indebtedness in accordance with Section 5.1(a)(vii), (C) pursuant to the exercise of repurchase rights existing Contracts in effect prior to the date of this Agreement; or , and (BD) shares assets with a fair market value of Company Common Stock accepted as payment for less than $500,000 in the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable awardaggregate;
(viiik) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions as set forth in on Section 4.1(a)(ix5.1(a)(xi) of the Company Disclosure Schedule;
(x) except in the ordinary course of businessLetter, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign as required by any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if Company Benefit Plan in effect on the date of this Agreement, would constitute a Material Contract;
or (xiC) change as required by applicable Law, (1) materially increase any compensation or benefit provided or to be provided to any current or former employee or other service provider of the Company or any of its methods Subsidiaries, other than increases in the Ordinary Course of financial accounting Businesses and increases in compensation to certain employees, who are non-executive officers, which are reasonably necessary to bring such compensation to market level compensation, (2) enter into or accounting practices adopt any new Company Benefit Plan or amend in any material respect or terminate any Company Benefit Plan, (3) accelerate the funding or vesting of any compensation or benefit, or (4) make any material contribution to any Company Benefit Plan other than as required by changes contributions made in GAAPthe Ordinary Course of Business;
(xiil) make enter into, materially amend or terminate any Company Material Contract (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to Contract that would be a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes Company Material Contract if such agreement would reasonably be expected to result it were in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver effect as of the statute date of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”this Agreement), except that the Company and its Subsidiaries may (x) enter into Contracts of the types described in clauses (B), (F)(II) or any (F)(V) of Section 4.1(t)(i)) and (y) amend Company Subsidiary may make any Non-Budgeted Capital Expenditure thatMaterial Contracts, when added to all other Non-Budgeted Capital Expenditures made by the Company so long as such Contracts and the Company Subsidiaries since the date of this Agreement would amendments will not, in the aggregate, exceed increase the aggregate CapEx Budget liabilities of the Company and its Subsidiaries by more greater than $100,000500,000;
(xivm) except as expressly required acquire (whether by applicable Legal Requirements merger, consolidation or the Company’s Organizational Documents, convene (Aacquisition of stock or assets or otherwise) any special meeting corporation, partnership or other business organization or division thereof or substantially all of the Company’s shareholders other than the Company Shareholder Meeting or (B) assets of any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impairforegoing, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, purchases of inventory and other assets in the ordinary course Ordinary Course of business in Business or pursuant to existing Contracts, and (B) assets with a manner consistent with past practice, fair market value of liabilities reflected or reserved against no greater than $500,000 in the Most Recent aggregate;
(n) make any payment or accrual of, or commit to, capital expenditures for any period that are greater than 105% of the capital expenditures reflected in the Company’s capital expenditure budget provided to Parent prior to the date hereof;
(o) compromise, settle or agree to settle any Action (including any Action relating to this Agreement or the transactions contemplated hereby), or consent to the same, other than compromises, settlements or agreements with no obligation of the Company Balance Sheet, and its Subsidiaries other than payment of cash (A) in the Ordinary Course of Business or (B) those that do not (x) impose any injunctive relief on to exceed $300,000 in the Company or any Company Subsidiary (other than confidentiality obligations)aggregate for all such compromises, (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, settlements and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or agreements under this clause (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied); or
(xxiip) authorizeagree, approve authorize or enter into any agreement or make any commitment commit to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b2) Parent agrees that, during the period from after the date of this Agreement through and prior to the earlier of the Closing or Merger 1 Effective Time and the termination of this AgreementAgreement in accordance with its terms, except (1w) to the extent unless the Company shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned delayed or delayedconditioned), (2x) except as otherwise expressly permitted by this Agreement, (y) except as required by applicable Laws, or (z) except as set forth in Section 5.1(b) of the Parent Disclosure Letter, the business of it and its Subsidiaries shall be conducted in the Ordinary Course of Business, and, to the extent consistent therewith, it shall, and it shall cause its Subsidiaries to, use its and their respective commercially reasonable efforts to preserve their business organizations, preserve their assets and properties in good repair and condition and preserve their relationships with those persons having significant business dealings with them to the end that their good will and ongoing businesses shall be unimpaired at the Closing. Without limiting the generality of and in furtherance of the foregoing, from the date of this Agreement until the earlier of the Merger 1 Effective Time and the termination of this Agreement in accordance with its terms, except (X) as otherwise expressly permitted by this Agreement, (Y) as the Company may consent in writing (such consent not to be unreasonably withheld, delayed or conditioned), or (Z) as set forth in Section 4.1(b5.1(b) of the Parent Disclosure ScheduleLetter, it will not and will not permit its Subsidiaries to:
(3a) as may be required by applicable Legal Requirementsadopt or propose any change in Parent’s certificate of incorporation or bylaws or the organizational documents of any of Parent’s Subsidiaries;
(b) merge or consolidate itself or any of its Subsidiaries with any other Person, except for any such transactions among its wholly-owned Subsidiaries and except in connection with any transaction in accordance with Section 5.1(b)(xiii), or restructure, reorganize or completely or partially liquidate;
(4c) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except other than (A) to in connection with the extent the Company shall otherwise give its prior consent in writingexercise or settlement of Parent Equity Awards, (B) issuances pursuant to redemptions of Common Units (as set forth defined in Section 4.1(bParent Certificate of Incorporation) pursuant to the GH LLC Agreement in the Ordinary Course of the Parent Disclosure ScheduleBusiness, (C) as may be required permitted by applicable Legal RequirementsSection 5.1(b)(xi), or (D) as expressly permitted disclosed in Section 5.1(b)(xi) of the Parent Disclosure Letter, issue, sell, pledge, dispose of, grant, transfer, encumber, or required authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of its capital stock or of any of its Subsidiaries (other than the issuance of shares by this Agreementits wholly-owned Subsidiary to it or another of its wholly-owned Subsidiaries), Parent shall not (and shall not permit or securities convertible or exchangeable into or exercisable for any Parent Subsidiary to):
shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, other than (i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability grants of Parent Equity Awards to consummate new hires in the MergersOrdinary Course of Business or (ii) grants of Parent Equity Awards up to $100,000, in the aggregate, to non-executive officer employees;
(iid) splitmake any loans, combineadvances or capital contributions to or investments in any Person (other than between itself and any of its direct or indirect Subsidiaries), subdivide, change, exchange, amend other than advances to employees in the terms Ordinary Course of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent SubsidiariesBusiness;
(iiie) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any of its capital stock (except for dividends paid by any direct or indirect wholly-owned Subsidiary to it or to any other direct or indirect wholly-owned Subsidiary) or enter into any agreement with respect to the voting of its capital stock;
(f) other than in connection with tax withholdings related to a Parent Equity Award, reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of Parent’s capital stock or securities convertible or exchangeable into or exercisable for any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiarystock;
(ivg) incur any indebtedness or guarantee any indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire (by mergerany of its debt securities or of any of its Subsidiaries, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) except for (A) guarantees incurred in compliance with this Section 5.1(b) by it of indebtedness of its wholly-owned Subsidiaries, or (B) interest rate swaps on customary commercial terms consistent with past practice;
(h) except as may be required as a result of a change in applicable Law or GAAP or as required by Parent’s auditors or accountants, make any other Personchanges with respect to accounting policies or procedures;
(i) except as may be required as a result of a change in applicable Law, make, change or revoke any material Tax election, material method of Tax accounting or any annual Tax accounting period;
(j) transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse (except with respect to patents expiring in accordance with their terms) or expire or otherwise dispose of any of its material assets, product lines or businesses or of its Subsidiaries, including capital stock of any of its Subsidiaries, except (A) in connection with services and products provided in the Ordinary Course of Business and sales of obsolete assets, (B) any equity interest Liens securing indebtedness in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsaccordance with Section 5.1(b)(vii), (C) pursuant to Contracts in effect prior to the date of this Agreement, and (D) assets with a fair market value of less than $500,000 in the aggregate;
(k) other than (A) as set forth on Section 5.1(b)(xi) of the Parent Disclosure Letter, (B) as required by any business or division Parent Benefit Plan in effect on the date of another Personthis Agreement, or (DC) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each caserequired by applicable Law, (1) acquisitions by materially increase any compensation or benefit provided or to be provided to any current or former employee or other service provider of Parent from or any wholly owned Parent Subsidiary or among any wholly owned Parent of its Subsidiaries; , other than increases in the Ordinary Course of Businesses and increases in compensation to certain employees, who are non-executive officers, which are reasonably necessary to bring such compensation to market level compensation, (2) the purchase of equipmententer into or adopt any new Parent Benefit Plan or amend in any material respect or terminate any Parent Benefit Plan, supplies and inventory in the ordinary course of business; (3) inbound licenses accelerate the funding or vesting of any compensation or benefit, or (4) make any material contribution to any Parent Benefit Plan other than contributions made in the Ordinary Course of Business;
(l) enter into, materially amend or terminate any Parent Material Contract (or any Contract that would be a Parent Material Contract if it were in effect as of the date of this Agreement), except that Parent and its Subsidiaries may (x) enter into Contracts of the types described in clauses (B), (F)(II) or (F)(V) of Section 4.2(t)(i)) and (y) amend Parent Material Contracts, so long as such Contracts and amendments will not, in the aggregate, increase the liabilities of Parent and its Subsidiaries by greater than $500,000;
(m) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other grants business organization or assignments division thereof or substantially all of Intellectual Property the assets of any of the foregoing, other than (A) purchases of inventory and other assets in the ordinary course Ordinary Course of businessBusiness or pursuant to existing Contracts, and (B) assets with a fair market value of no greater than $500,000 in the aggregate;
(n) make any payment or accrual of, or commit to, capital expenditures for any period that are greater than 105% of the capital expenditures reflected in Parent’s capital expenditure budget provided to the Company prior to the date hereof;
(o) compromise, settle or agree to settle any Action (including any Action relating to this Agreement or the transactions contemplated hereby), or consent to the same, other than compromises, settlements or agreements with no obligation of Parent and its Subsidiaries other than payment of cash (A) in the Ordinary Course of Business or (B) not to exceed $300,
Appears in 1 contract
Interim Operations. 1
(a) The Except (i) as described in Section 5.1(a) of the Company Disclosure Letter, (ii) as otherwise expressly required by this Agreement or any other Transaction Document (including in connection with the Private Placements), (iii) as required by applicable Law or COVID-19 Measures or (iv) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed, or denied), the Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through until the Closing, or the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give Agreement in accordance with its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreementterms, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct (A) operate its business in the ordinary course of business; provided that any action expressly permitted by business consistent with past practice and (B) use commercially reasonable efforts to maintain and preserve intact its business organization, assets, properties and material business relations.
(b) Without limiting the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of generality of, and in furtherance of, the foregoing. During the period , from the date of this Agreement through the earlier of until the Closing or the earlier termination of this Agreement in accordance with its terms, except (v) as described in the corresponding subsection of Section 5.1(b) of the Company Disclosure Letter, (w) as otherwise expressly required by this Agreement or any Transaction Document, (x) as required by applicable Law or COVID-19 Measures or (y) as Parent shall otherwise consent to in writing (which consent shall not be unreasonably withheld, conditioned, delayed or denied), the Company will not and will not permit its Subsidiaries to:
(i) adopt or propose any change in its or its Subsidiaries’ Organizational Documents;
(ii) (A) merge or consolidate itself or any of its Subsidiaries with any other Person, except for transactions among its wholly owned Subsidiaries or (B) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries;
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $200,000, or acquire any business or entity (whether by merger or consolidation, by purchase of substantially all assets or equity interests or by any other manner), in each case, in any transaction or series of related transactions, other than acquisitions or other transactions pursuant to Contracts to which the Company or any of its Subsidiaries are a party that are in effect as of the date of this Agreement;
(iv) sell, lease, license or otherwise dispose of any of its material assets or properties (other than Intellectual Property), except (A) to the extent Parent shall otherwise give its prior consent in writing (for sales, leases, licenses or other dispositions in the case ordinary course of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), business and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) for sales, leases, licenses or other dispositions of assets and properties with a fair market value not in excess of $150,000 in the aggregate;
(v) except pursuant to awards granted under the Company’s Stock Plan in the ordinary course of business and in accordance with the terms of the Stock Plan as set forth of the date of this Agreement, or in Section 4.1(a) connection with the Company Warrant Settlement or the Preferred Stock Conversion, issue, sell, grant or authorize the issuance, sale or grant of any shares of capital stock or other securities of the Company Disclosure Schedule, or any of its Subsidiaries (C) as may be required other than issuances by applicable Legal Requirementsa wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company), or (D) as expressly required by this Agreementany options, warrants, convertible securities, subscription rights or other similar rights entitling its holder to receive or acquire any shares of such capital stock or other securities of the Company shall not (and shall not permit or any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryits Subsidiaries;
(iivi) reclassify, split, combine, subdivide, changeredeem or repurchase, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or options, warrants or securities convertible or exchangeable into or exercisable for any shares of its capital stock, except in connection with the net exercise or settlement of awards, repurchases of unvested shares subject to early-exercised Company SubsidiaryOptions under the Company’s Stock Plan or in connection with the Company Warrant Settlement or the Preferred Stock Conversion;
(iiivii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of enter into any Company Subsidiary, other than dividends or distributions only agreement with respect to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryvoting of its capital stock;
(ivviii) acquire (by mergermake any loans, consolidationadvances, operation of law, acquisition of stock, other equity interests guarantees or assets, formation of a joint venture capital contributions to or otherwise) (A) any other Person, (B) any equity interest investments in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsthe Company or any direct or indirect wholly-owned Subsidiary of the Company), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property than in the ordinary course of business;
1 Note (ix) incur any Indebtedness for borrowed money or guarantee any such Indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to W&S: Subject to ongoing review by the Company.
(v) except in connection with acquire any transaction between debt security of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assetsSubsidiaries, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $150,000 in the aggregate;
(x) make or commit to make capital expenditures other than in an amount not in excess of $350,000, in the aggregate;
(xi) enter into any Contract that would have been a manner consistent Company Material Contract had it been entered into prior to the date of this Agreement, other than in the ordinary course of business;
(xii) amend or modify in any material respect or terminate any Company Material Contract, or waive or release any material rights, claims or benefits under any Company Material Contract, in each case, other than in the ordinary course of business;
(xiii) make any material changes with past practice respect to its accounting policies or procedures, except as required by changes in Law or GAAP;
(xiv) settle any Proceeding, except in the ordinary course of obsolete equipment business or assets where such settlement is covered by insurance or involves only the payment of monetary damages in an amount not more than $200,000 in the aggregate;
(xv) except in the ordinary course of business consistent with past practice; , file any material amended Tax Return, make, revoke or change any material Tax election in a manner inconsistent with past practice, adopt or change any material Tax accounting method or period, enter into any agreement with a Governmental Entity with respect to material Taxes, settle or compromise any examination, audit or other action with a Governmental Entity of or relating to any material Taxes or settle or compromise any claim or assessment by a Governmental Entity in respect of material Taxes, or enter into any Tax sharing or similar agreement (Bexcluding any commercial contract not primarily related to Taxes), in each case, to the extent such action could reasonably be expected to have any adverse and material impact on Parent;
(xvi) except in the ordinary course of business or pursuant to written Contracts the terms of any Company Benefit Plan in effect as of the date of this Agreement or commitments existing as required by Law, (A) increase the annual salary or consulting fees or target annual cash bonus opportunity, of any Company Employee with an annual salary or consulting fees and target annual cash bonus opportunity in excess of $200,000 as of the date of this Agreement; , (B) become a party to, establish, adopt, amend, or terminate any material Company Benefit Plan or any arrangement that would have been a material Company Benefit Plan had it been entered into prior to this Agreement, (C) as security for take any borrowings permitted by Section 4.1(a)(viii); action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Benefit Plan, (D) licenses granted to customers forgive any loans or issue any loans (other third parties than routine travel advances issued in the ordinary course of business in a manner consistent with past practice;
(viibusiness) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or to any Company Subsidiary’s capital stock or equity interestsEmployee, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of hire any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee engage any independent contractor (who is a natural person) with annual salary or consulting fees and target annual cash bonus opportunity in excess of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, $200,000 or (EF) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 who would be an “executive officer” (as defined in Rule 3b-7 of the Exchange Act) other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigationsell, claimassign, suitlease, action or proceedingexclusively license, except for settlements or compromises other than (A) the paymentpledge, discharge or satisfactionencumber, in the ordinary course of business in a manner consistent with past practicedivest, of liabilities reflected or reserved against in the Most Recent Company Balance Sheetabandon, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IPIntellectual Property, other than in its reasonable business judgment or grants of non-exclusive licenses in the ordinary course of business in a manner consistent with past practice, to customers for use of the products or (B) authorize the disclosure to any third party services of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(iixviii) splitbecome a party to, combineestablish, subdivideadopt, changeamend, exchange, amend the terms of commence participation in or reclassify enter into any shares of Parent’s capital stock collective bargaining or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiarieslabor union Contract;
(iiixix) declarefail to use commercially reasonable efforts to keep current and in full force and effect, set asideor to comply with the requirements of, make or pay to apply for or renew, any dividend permit, approval, authorization, consent, license, registration or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid certificate issued by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities Governmental Entity that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets is material to the conduct of the business of the Company and the Company its Subsidiaries, taken as a whole, except in each case, ;
(1xx) acquisitions by Parent from file any wholly owned Parent Subsidiary prospectus supplement or among registration statement or consummate any wholly owned Parent Subsidiaries; (2) offering of securities that requires registration under the purchase of equipment, supplies and inventory Securities Act or that includes any actual or contingent commitment to register such securities under the Securities Act in the ordinary course future;
(xxi) fail to maintain, cancel or materially change coverage under, in a manner materially detrimental to the Company or any of businessits Subsidiaries, any insurance policy maintained with respect to the Company and its Subsidiaries and their assets and properties;
(xxii) enter into any material new line of business outside of the business currently conducted by the Company and its Subsidiaries as of the date of this Agreement; or
(3xxiii) inbound licenses enter into any Contract, or other grants otherwise become obligated, to do, or assignments authorize, any of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees thatIn furtherance of, during and without limiting, the period foregoing Section 6.2, from the date of this Agreement through until the earlier of the Closing or the termination of Effective Time, except (w) as otherwise expressly contemplated by this Agreement, except (1x) to the extent as expressly required by applicable Law, (y) as Parent shall otherwise give its prior consent may approve in writing (such consent which approval shall not to be unreasonably withheld, conditioned or delayed), ) or (2z) as set forth in Section 4.1(a) 6.3 of the Company MLP Disclosure ScheduleLetter, each of the MLP Entities (3and with respect to Section 6.3(a) as may be required by applicable Legal Requirementsbelow, or (4GP Holdings) as expressly required by this Agreement, the Company shall, will not and shall cause the Company will not permit any of MLP’s Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that and GP Holdings will not permit any action expressly permitted by the remaining provisions of this Section 4.1(aMLP Group Entity to, directly or indirectly:
(a) (i) issue (including Section 4.1(aissuing any certificate in connection therewith), grant, sell or otherwise permit to become outstanding, or authorize the creation of, any additional Equity Interests (whether “phantom” or otherwise) or any additional Rights, including transactions between or among the MLP Group Entities or (ii) certificate any existing Partnership Interests;
(b) (i) split, combine or reclassify any of its Equity Interests or issue or authorize or propose the Company Disclosure Scheduleissuance of any other securities in respect of, in lieu of or in substitution for its Equity Interests, (ii) will not constitute a violation repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries to purchase, redeem or otherwise acquire any membership, partnership or other Equity Securities or (iii) enter into any Contract with respect to the foregoing. During the period from the date voting of this Agreement through the earlier its Partnership Interests or other Equity Securities;
(c) (i) sell, transfer, lease, or otherwise dispose of, or encumber all or any portion of the Closing its assets, business or the termination of this Agreementproperties, except for (A) to the extent Parent shall otherwise give its prior consent in writing (in the case sales, transfers and dispositions of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned obsolete or delayed)worthless equipment, (B) as set forth in Section 4.1(a) sales, transfers and dispositions of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (inventory and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory produced hydrocarbons in the ordinary course of business or (3C) inbound licenses sales, transfers, assignments, conveyances, abandonment, allowances to lapse, licenses, sublicenses, covenants not to assert or other grants or assignments disposals of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; , (Bii) pursuant to written Contracts acquire, by merger or commitments existing as otherwise, or lease any assets or securities or all or any portion of the date business or property of this Agreement; or any other Person, other than (Cx) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties acquisitions of goods and services in the ordinary course of business in a manner consistent with past practicepractice and (y) acquisitions pursuant to which the aggregate value exchanged or purchase price paid or payable by any MLP Group Entity would not exceed $2,000,000 in the aggregate, (iii) merge, consolidate or enter into any other business combination transaction with any Person or (iv) convert from any one form of business entity to any other form of business entity;
(viid) directly make or indirectly repurchasedeclare dividends or distributions to the Unitholders or holders of Phantom Units (whether in cash, redeem assets, stock or otherwise acquire other securities of any shares MLP Group Entity or of any other Person), other than (i) regular quarterly cash distributions to the Unitholders and holders of Phantom Units declared and made in accordance with and subject to the limitations of Annex VI of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible MLP Disclosure Letter and (currently or after ii) a one-time cash distribution to the passage Unitholders and holders of time or Phantom Units declared in accordance with and subject to the occurrence limitation of certain events) into or exchangeable for any shares Annex VI of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, MLP Disclosure Letter and made in accordance with the terms provisions of the applicable awardthis Agreement;
(viiie) incur (other than draws on existing revolving loans)amend any MLP Charter Document, redeem, repurchase, prepay (other than prepayments the MLP GP LLC Agreement or any similar governing document of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among of the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)MLP Group Entities;
(ixf) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (iii) enter into any Contract or agreement that, that would have been an MLP Material Contract if in effect on the date of this Agreement, (ii) amend any Contract in existence on the date hereof that is not a Material Contract on the date hereof if, after giving effect to such amendment, it would constitute be an MLP Material Contract or (iii) become a party to, establish or adopt any collective bargaining, union, labor or similar Contract;
(g) materially modify or amend, or waive or assign any material rights under, or terminate or assign, any MLP Material Contract;
(xii) waive, release or assign its rights with respect to any Proceeding in which any of the MLP Group Entities are seeking monetary damages in excess of $2,000,000 or (ii) compromise, settle or agree to settle any Proceeding in which damages are being sought against any of the MLP Group Entities, other than compromises, settlements or agreements in the ordinary course of business consistent with past practice that (A) involve only the payment of monetary damages not in excess of $5,000,000 individually or $10,000,000 in the aggregate and (B) do not involve any imposition of equitable relief on, or any admission of wrongdoing or, in the context of any actual or potential violation of any Criminal Law, any nolo contendere or similar plea by, any MLP Group Entity;
(i) (i) implement or adopt any change in its GAAP accounting principles, practices or methods, other than as may be required by GAAP or SEC rules and regulations or (ii) write up, write down or write off the book value of any assets, except in accordance with GAAP consistently applied;
(j) fail to use reasonable best efforts to maintain, with financially responsible insurance companies, insurance in such amounts and against such risks and losses as is maintained by it on the date of this Agreement;
(k) (i) change in any material respect any of its express or deemed elections relating to Taxes, including elections for any and all Subsidiaries or other investments where it has the capacity to make such binding election, (ii) settle or compromise any material Proceeding relating to Taxes or (iii) change in any material respect any of its methods of financial accounting reporting income or accounting practices deductions for federal income Tax purposes from those employed in any material respect other than the preparation of its federal income Tax Return for the most recent taxable year for which a return has been filed, except as may be required by changes in GAAPapplicable Law;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xivl) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting terms of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or MLP Benefit Plan as in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief effect on the Company or any Company Subsidiary (other than confidentiality obligations)date hereof, (yi) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business consistent with past practice, increase or accelerate the payment or vesting of the compensation, benefits or rights payable to or accrued for, or to become payable to or accrued for, any current or former employee, officer, individual manager or director of any MLP Group Entity or any of their beneficiaries, (ii) other than in the ordinary course of business consistent with past practice, grant any severance or termination pay to any employee, officer, individual manager or director of any MLP Group Entity, (iii) establish, adopt, enter into, amend or terminate any MLP Benefit Plan, (iv) other than in the ordinary course of business consistent with past practice, grant, pay, award or accelerate the vesting of, or commit to grant, pay, award or accelerate the vesting of, any bonuses or incentive compensation, any equity-based awards or any other compensation, (v) fund any rabbi trust or similar Contract, (vi) other than in the ordinary course of business consistent with past practice, terminate the employment or services of any officer or other employee whose target annual base compensation is greater than $100,000, other than for cause, (vii) forgive any loans of any current or former employee, manager, officer, director or consultant of any MLP Group Entity or GP Holdings, (viii) hire any officer, employee, independent contractor or consultant whose target annual base compensation is greater than $200,000 or (ix) enter into or modify or amend any indemnification or similar Contract with any current or former employee, individual manager, officer or director;
(m) (i) (A) incur, assume, guarantee or otherwise become liable, directly, contingently or otherwise, for any (1) Indebtedness under clause (a), (b) or (e) of the definition of Indebtedness (other than any borrowing or draws under existing revolving credit facilities in the ordinary course of business consistent with past practice), (2) Indebtedness under clause (c) of the definition of Indebtedness (other than standby letters of credit for collateral support) or (3) Indebtedness under clause (d) of the definition of Indebtedness, if in excess of $5,000,000 or (B) prepay or repurchase any Indebtedness prior to the stated maturity thereof, (ii) enter into any material lease (whether operating or capital), (iii) create any Lien (other than Permitted Liens) on its property or the property of its Subsidiaries in connection with any pre-existing Indebtedness, new Indebtedness or lease, (iv) make or commit to make any capital expenditures, other than such capital expenditures as are required on an emergency basis or for the safety of individuals, assets or the environment, (v) issue or sell any debt securities or warrants or other rights to acquire any debt security of any MLP Group Entity, (vi) enter into any “keep well” or other Contract to maintain any financial statement condition of another Person or (vii) enter into any Contract having the economic effect of any of the foregoing;
(n) restructure, reorganize or liquidate all or a manner material part of any MLP Group Entity’s assets or authorize, recommend, propose or announce an intention to adopt a plan of complete or partial dissolution or liquidation;
(o) make any loans, advances or capital contributions to, or investments in, any Person, other than (i) travel, relocation expenses and similar expenses or advances to its employees in the ordinary course of business consistent with past practice and (ii) trade credit granted in the ordinary course of business consistent with past practice;
(xxip) enter into any new Contract to sell propylene, produced hydrocarbons or other substances other than in the ordinary course of business consistent with past practice;
(q) implement or otherwise enter into any derivative security with respect to hydrocarbon production or marketing or enter into any Derivative Transaction;
(r) (i) engage in the production of any chemical, petrochemical or produced hydrocarbon other than those produced in the ordinary course of business consistent with past practice or (ii) materially deviate from the operating practices or production schedule of the Facility, including implementing or announcing any plant closing, material reduction in labor force or other material layoff of employees or service providers;
(s) take any action that is intended or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V Article VII not being satisfied;
(t) convene any meeting, special or otherwise (or any adjournment or postponement thereof), of the Unitholders;
(u) enter into any transactions or Contracts with any Affiliate or other Person that would be required to be disclosed by MLP under Item 404 of Regulation S-K of the SEC;
(v) conduct the businesses of any MLP Group Entity in a manner that would cause any MLP Group Entity to become an “investment company” subject to registration under the Investment Company Act; or
(xxiiw) authorize, approve agree or enter into any agreement or make any commitment commit to take any of the actions described in do anything prohibited by clauses (ia) through (xxiv) of this Section 4.1(a)6.3.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Merger Agreement (PetroLogistics LP)
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementEffective Period, except (1i) as otherwise expressly required or contemplated by this Agreement or the Restructuring Term Sheet, (ii) as required by applicable Law (including the Bankruptcy Code) or (iii) as consented to the extent Parent shall otherwise give its prior consent in writing by the DIP Agent (such which consent shall not to be unreasonably withheld, conditioned or delayed), (2x) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may Business shall be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business conducted in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(abusiness consistent with past practice and in accordance with applicable Law and (y) (including Section 4.1(a) of the Company Disclosure Scheduleand its Subsidiaries shall use their respective commercially reasonable efforts to preserve intact the Business and their relationship with customers, suppliers, distributors, wholesalers, retailers, employees and Governmental Entities.
(b) will not constitute a violation of Without limiting the generality of, and in furtherance of, the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementEffective Period, except (Ax) as otherwise expressly required or contemplated by this Agreement or the Restructuring Term Sheet, (y) as required by applicable Law (including the Bankruptcy Code) or (z) as consented to the extent Parent shall otherwise give its prior consent in writing by the DIP Agent (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such which consent shall not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (not, and shall not permit any Company Subsidiary of its Subsidiaries to):, directly or indirectly:
(i) amend the Company’s Organizational Documents certificate of incorporation, bylaws or amend other organizational documents of the Organizational Documents of any Company Subsidiaryor its Subsidiaries;
(ii) splitmerge or consolidate the Company or any of its Subsidiaries with any other Person, combineor restructure, subdividereorganize or completely or partially liquidate the Company or any of its Subsidiaries or otherwise enter into any agreements providing for the sale of their respective material assets, changeoperations or business;
(iii) acquire assets outside of the ordinary course of business from any other Person;
(iv) issue, exchangesell, amend pledge, dispose of, grant, transfer, encumber, or authorize the terms of issuance, sale, pledge, disposition, grant, transfer or reclassify encumbrance of, any shares of the Company’s capital stock or other equity interests Equity Interests of the Company or any of its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock or Equity Interests, or any options, warrants or other rights of any kind to acquire any of the foregoing;
(iiiv) incur, create or assume any Encumbrance (other than Permitted Encumbrances) on any properties or assets, tangible or intangible, of the Company or any of its Subsidiaries;
(vi) (A) incur, assume or guarantee any Indebtedness or capitalized lease obligations or issue any debt securities or (B) make any loans, advances, guarantees or capital contributions to, or investments in, any other Person;
(vii) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than Equity Interests (except for dividends or distributions only to the extent paid by any direct or indirect wholly owned Company Subsidiary to the Company or another to any other direct or indirect wholly owned Company Subsidiary) or enter into any agreement with respect to the voting of its capital stock or Equity Interests (other than this Agreement);
(ivviii) acquire (by mergerreclassify, consolidationsplit, operation of lawcombine, acquisition of stocksubdivide or redeem, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding acquire, directly or indirectly, any additional shares of, of its capital stock or Equity Interests or securities convertible or exchangeable for, into or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on exercisable for any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)foregoing;
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President Budget (as defined in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation DIP Orders), make or benefits required pursuant to authorize any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedulecapital expenditure;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of that would have been a Material Contract had it been entered into prior to this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension cancel or waiver terminate (other than, for the avoidance of the statute of limitations doubt, any expiration in accordance with its terms), or modify or amend in any material respect, or waive any material rights under, any Material Contract;
(xii) make any material changes with respect to a material amount of Taxesaccounting policies or procedures, except as required by changes in applicable Law or GAAP;
(xiii) settle or compromise any (A) Cause of Action (other than consignment settlements involving only unsecured claims with an allowed amount of less than one hundred thousand dollars ($100,000)), or (B) Patent-related Cause of Action involving any of the Company Products Intellectual Property;
(xiv) transfer, assign, sell, lease, grant any license (other than non-exclusive licenses granted in the ordinary course of business) with respect to, or, to the extent within the control of the Company or any of its Subsidiaries, abandon or permit to lapse, any material Company Intellectual Property;
(xv) terminate or fail to renew any material Business Permit;
(xvi) other than in the ordinary course of business, make any capital expenditure that is not contemplated by sell, pledge, dispose of, transfer or authorize the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”)sale, except that the Company pledge, disposition or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting transfer of any capital stock assets or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation properties of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company its Subsidiaries;
(xvii) settle grant any material licenses, sublicenses, covenants not to assert or compromise similar rights with respect to any litigationassets or properties, claimwhether tangible or intangible, suitof the Company or its Subsidiaries;
(xviii) fail to use commercially reasonable efforts to maintain the Insurance Policies or to renew or replace the Insurance Policies following their termination;
(xix) except as required pursuant to the terms of any Debtor Plan in effect as of the date of this Agreement, action the Approved ▇▇▇▇ or proceedingthe Approved KERP, except for settlements or compromises other than (A) increase in any manner the compensation, consulting fees, incentive, bonus, retirement, welfare, fringe or other benefits, severance or termination pay of any employee or independent contractor, (B) become a party to, establish, adopt, amend, commence participation in or terminate any Debtor Plan or any arrangement that would have been a Debtor Plan had it been entered into prior to this Agreement, (C) grant any new awards, or amend or modify the terms of any outstanding awards, under any Debtor Plan, (D) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, discharge of compensation or satisfactionbenefits under any Debtor Plan, (E) change any actuarial or other assumptions used to calculate funding obligations with respect to any Debtor Plan that is required by applicable Law to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (F) forgive any loans or issue any loans (other than routine travel advances issued in the ordinary course of business in business) to any employee, (G) hire any employee or engage any independent contractor (who is a manner consistent with past practice, natural person) other than the engagement of liabilities reflected independent contractors to fill vacancies or reserved against in staff currently existing or contemplated projects to the Most Recent Company Balance Sheet, extent not currently staffed or (BH) those that do not (x) impose terminate the employment of any injunctive relief on the Company or any Company Subsidiary (officer other than confidentiality obligations), (yfor cause other than any officer who was provided with written notice of termination prior to the date of this Agreement and who is listed on Section 7.1(b)(xix) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company PermitsDisclosure Letter;
(xx) become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization;
(xxi) (A) fail to pay change in any issuance, renewal, maintenance and other payments that become due material respect any material method of accounting of the Company or its Subsidiaries for Tax purposes; (B) enter into any agreement with any Taxing Authority (including a “closing agreement” under Code Section 7121) with respect to any material Tax or Tax Returns of the Company Registered IP or otherwise abandon, cancel, its Subsidiaries; (C) surrender a right of the Company or permit its Subsidiaries to lapse a material Tax refund; (D) change an accounting period of the Company or its Subsidiaries with respect to any material Company Registered IP, other than in its reasonable business judgment Tax; (E) file an amended Tax Return; (F) change or in the ordinary course of business in a manner consistent revoke any material election with respect to Taxes; (G) make any material election with respect to Taxes that is inconsistent with past practice, or ; (BH) authorize the disclosure file any Tax Return that is inconsistent with past practice; (I) consent to any third party extension or waiver of the limitations period applicable to any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, Tax claim or assessment (other than in the ordinary course of business business); or (J) take any action (or fail to take any action) that would result in a manner consistent with past practiceloss of any material Tax losses, credits or other attributes that may be used to reduce Tax liabilities;
(xxixxii) take revalue any assets or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) properties of the Code Company or its Subsidiaries (B) result in any of the conditions including Inventory), except to the Mergers set forth in ARTICLE V not being satisfiedextent required by GAAP; or
(xxiixxiii) authorizeagree, approve authorize or enter into any agreement commit, in writing or make any commitment otherwise, to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing actions.
(bc) Parent agrees that, during The Supporting Lenders shall not knowingly take or permit any of their Subsidiaries to take any action that is reasonably likely to prevent or materially impede the period from the date of this Agreement through the earlier consummation of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessTransactions.
Appears in 1 contract
Sources: Restructuring Support Agreement (Endologix Inc /De/)
Interim Operations. 1
(a) The Company agrees that, during Except (x) for the period from operations covered by the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent AFEs described in writing (such consent not to be unreasonably withheld, conditioned or delayedExhibit 4.1(h), (2) as the operations set forth in Section 4.1(a) of the Company Disclosure ScheduleSide Letter Agreement, or such operations required pursuant to any Applicable Contract, applicable Law or Lease, (3y) as may be required by applicable Legal Requirementsin the event of an emergency to protect life, property or the environment, and (4z) as expressly required contemplated by this AgreementAgreement or as expressly consented to in writing by Buyer (which consent shall not be unreasonably delayed, the Company withheld or conditioned), Seller shall, from and shall cause after the Company Subsidiaries toExecution Date until Closing:
(i) as to Properties operated by CPX or its Affiliates, use commercially reasonable efforts to conduct its business continue the operation of the Properties in the ordinary course of business; provided that any action expressly permitted by , or, as to Properties where CPX or an Affiliate of CPX is not the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute operator, continue its actions as a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property non-operator in the ordinary course of business;
1 Note (ii) subject to W&S: Subject interruptions resulting from force majeure, mechanical breakdown and planned maintenance, in each case, operate the Properties in compliance with all applicable Laws and the terms of all Leases and Applicable Contracts;
(iii) maintain, or cause to ongoing review by be maintained, the Companybooks of account and Records relating to the Properties in the usual, regular and ordinary manner and in accordance with the usual accounting practices of Seller; and
(iv) to the extent Seller has Knowledge thereof, use commercially reasonable efforts to timely inform Buyer of all matters it considers in good faith to be material developments affecting any of the Properties.
(vb) except Except (x) for the operations covered by the AFEs described in connection with any transaction between Exhibit 4.1(h), the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares ofoperations set forth in the Side Letter Agreement, or securities convertible such operations required pursuant to any Applicable Contract, applicable Law or exchangeable forLease, (y) as required in the event of an emergency to protect life, property or optionsthe environment, warrants and (z) as expressly contemplated by this Agreement or rights as expressly consented to acquirein writing by Buyer (which consent shall not be unreasonably delayed, any shares of its capital stock withheld or other equity interestsconditioned), other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;Seller shall not, from and after the Execution Date until Closing:
(vii) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, sell or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets portion of the Company, Properties except for sales or other than: dispositions of (A1) sales of inventory, goods or services Hydrocarbons in the ordinary course of business in a manner consistent with past practice after production, or of obsolete (2) equipment and other personal property or assets fixtures in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as where the same has become obsolete, is otherwise no longer necessary for the operation of the date Properties, or is replaced by an item or items of this Agreementat least equal suitability;
(ii) affirmatively terminate any Material Contract or materially amend or change the terms of any Material Contract;
(iii) enter into an agreement that, if in existence on the Execution Date would be a Material Contract;
(iv) affirmatively release, terminate or materially amend any Lease, Easement, permit or license;
(v) incur any indebtedness or take or fail to take any action that would cause a lien or encumbrance to arise or exist on the Properties or otherwise allow a lien (other than Permitted Encumbrances) to attach to or encumber the Properties or any portion thereof;
(vi) grant or create any Preferential Right, transfer restriction or similar right, obligation, or requirement with respect to the Properties; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;and
(vii) directly except for the commitments set forth in Exhibit 4.1(h), all of which are deemed to be approved, approve or indirectly repurchase, redeem or otherwise acquire propose any shares operations on the Properties anticipated to cost the owner of the CompanyProperties more than $50,000 per operation or activity net to Seller’s or any Company Subsidiaryof its Affiliate’s capital stock or equity interestsinterest.
(c) Buyer acknowledges that Seller is currently, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased and from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for hereof will continue to, conduct certain operations required in order to perpetuate the exercise price of Company Options or for withholding Taxes incurred in connection with Leases and extend its rights under the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, Farmout Agreement and, notwithstanding anything to the contrary in this Section 4.1(a)(ix)6.3, provide but subject to Section 6.3(d) to the contrary, all activities and actions of Seller taken in connection therewith are deemed authorized by Buyer, without further consultation, and regardless of whether such Person with compensation activities and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that actions are in the ordinary course of business in a manner consistent with past practice; business.
(d) With the exception of the operations and (6activities set forth on Exhibit 4.1(h) any other actions and the operations and activities set forth in Section 4.1(a)(ixthe Side Letter Agreement, which shall be deemed authorized by Buyer without further consultation, should Seller receive (or desire to make) any proposals to drill additional ▇▇▇▇▇ on the Oil and Gas Properties, or to conduct other operations which require consent of non-operators under an applicable operating agreement, Seller will notify Buyer of, and consult with Buyer concerning, such proposals, provided that in the event Seller and Buyer cannot come to an agreement on any such proposal, any decisions with respect to such proposal shall be made by Seller in its sole discretion. From and after the Effective Date, any proposed activities other than those set forth on Exhibit 4.1(h) or in the Side Letter Agreement shall be subject to Buyer’s prior written consent. The Parties hereby recognize that the current ownership and operation of the Company Disclosure Schedule;Properties may include Seller electing not to participate (i.e., non-consent status) in ▇▇▇▇▇ drilled pursuant to an operating agreement, joint exploration agreement or spacing order relating to the Properties and that Seller may continue to make consistent elections for such Properties, provided, however, Seller will provide Buyer with notice of such election. For the avoidance of doubt, subject to the Side Letter Agreement and notwithstanding anything in this Agreement to the contrary, in no event shall Seller be required to drill or complete any ▇▇▇▇▇ prior to Closing. The Buyer shall be permitted to undertake the activities on the Oil and Gas Properties in accordance with and subject to the terms of the Side Letter Agreement.
(xe) except Without expanding any obligations which Seller may have to Buyer, it is expressly agreed that Seller shall never have any liability to Buyer with respect to its operation of a Property greater than that which it might have as the operator to a non-operator under the applicable operating agreement (or, in the ordinary course absence of businesssuch an agreement, under the AAPL 610 (i)(A1989 Revision) amend or terminate form Operating Agreement), IT BEING RECOGNIZED THAT, UNDER SUCH AGREEMENTS AND SUCH FORM, SELLER IS NOT RESPONSIBLE FOR ITS OWN NEGLIGENCE, AND HAS NO RESPONSIBILITY OTHER THAN FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(except for terminations pursuant f) Promptly following the execution of this Agreement, Buyer shall use its commercially reasonable efforts to secure the fracing and completion services of ▇▇▇▇ Energy Services with respect to the expiration following four uncompleted ▇▇▇▇▇ located in ▇▇▇▇▇▇ County, Texas: Durham ▇▇▇▇▇ Fuente #212HU (API # 389-35440) to be scheduled on or about June 1, 2017; Durham ▇▇▇▇▇ Fuente #214HU (API # 389-35464) to be scheduled on or about June 25, 2017; Durham ▇▇▇▇▇ Fuente #207HL (API # 389-35563) to be scheduled on or about July 10, 2017; and Durham ▇▇▇▇▇ Fuente #209HL (API # 389-35431) to be scheduled on or about August 14, 2017. The scheduled dates set forth above are estimates only and are subject to the availability of ▇▇▇▇ Energy Services. In the existing term of event (i) the Closing has not occurred prior to five Business Days before any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contractsscheduled service, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would notis terminated pursuant to Section 8.3, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct Buyer shall use its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct assign and transfer its business rights with respect to such scheduled services to Seller. Further, in the ordinary course event of business. Parent such transfer, Buyer agrees thatto pay to Seller the amount of any costs associated with such scheduled services above Seller’s current negotiated rate with C&J Energy Services, during provided that in the period from the date event of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) a transfer pursuant to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
clause (i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would above, no such payment shall be adverse in any material respect required unless this Agreement is terminated prior to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessClosing.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during and the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, Shareholder agree (except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required contemplated by this Agreement, including any Exhibits and Schedules hereto, or to the extent that Purchaser shall otherwise consent in writing) that as to the Company:
(1) The Company shall, shall carry on the Business in the Ordinary Course of Business and shall cause the Company Subsidiaries to, use all commercially reasonable efforts to conduct preserve intact its present business organization, keep available the services of its present officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it;
(2) The Company shall not and shall not propose to: (a) declare, set aside or pay any dividend, on, or make other distributions in the ordinary course respect of, any of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreementits capital stock, except (A) for those S corporation distributions necessary to cover applicable pass-through taxes on the Company's net income in 2002 prior to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal RequirementsClosing, or purchase or redeem any shares of its capital stock; (Db) split, combine or reclassify any of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock; (c) redeem, repurchase or otherwise acquire any shares of its capital stock; or (d) otherwise change its capitalization;
(3) Except as expressly required contemplated by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiary;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiariessell, issue, sellpledge, grant authorize or otherwise permit to become outstanding any additional shares propose the sale or issuance of, pledge or securities convertible purchase or exchangeable for, or options, warrants or rights to acquirepropose the purchase of, any shares of its capital stock of any class or securities convertible into, or rights, warrants or options to acquire, any such shares or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionsconvertible securities;
(vi4) except in connection with any transaction between the The Company and any wholly owned shall not amend its certificate of incorporation or its bylaws;
(5) The Company Subsidiary or among any wholly owned Company Subsidiaries, shall not sell, assignlease, transferpledge, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, encumber or otherwise dispose of (by mergeror agree to sell, consolidationlease, operation of lawpledge, division encumber or otherwise)otherwise dispose of, any of its assets that are material or any other assets except in the Ordinary Course of Business and in no event amounting in the aggregate to more than $25,000;
(6) The Company IP shall not incur any indebtedness for borrowed money or material tangible assets guarantee any such indebtedness or issue or sell any debt securities of the Company, Company or guarantee any debt securities of others other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets than in the ordinary course of business consistent with past practice; prior practice and in no event amounting in the aggregate to more than $25,000;
(B7) pursuant to The Company shall not make any capital expenditures in excess of $25,000 individually or $100,000 in the aggregate without the Purchaser's prior written Contracts or commitments existing as consent;
(8) The Company shall maintain the levels of inventory, materials and supplies used in the business of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner Company consistent with past practice;
(vii9) directly The Company shall not accelerate the collection of its accounts receivable or indirectly repurchasedelay the payment of its accounts payable or other liabilities, redeem or otherwise acquire any shares in each case arising out of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares operation of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants business of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights under any Material Contracts, or (ii) enter into any Contract or agreement that, if in effect on the date of this Agreement, which would constitute a Material Contract;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAP;
(xii) make (except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent inconsistent with past practice;
(xxi10) The Company shall not adopt or amend in any material respect any collective bargaining agreement or Employee Benefit Plan;
(11) The Company shall not grant to any employees any increase in compensation or in severance or termination pay, or enter into any employment agreement with any employee;
(12) The Company shall not acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or subdivision thereof, or make any investment by either purchase of stock or securities, contributions to capital, property transfer or, except in the Ordinary Course of Business, purchase of any property or assets, of any other individual or entity;
(13) The Company shall not make any material Tax election or settle or compromise any material Tax liability;
(14) The Company shall not waive, release, grant or transfer any rights of material value or modify or change in any material respect any Material Contract other than in the Ordinary Course of Business;
(15) The Company shall not take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action that is not in the Ordinary Course of Business or failure that is reasonably likely to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to representations and warranties of the Mergers Company and the Shareholders set forth in ARTICLE V not being satisfied; orthis Agreement becoming untrue in any material respect;
(xxii16) authorize, approve or enter into any agreement or make any commitment The Company shall maintain in full force and effect all insurance coverages for its properties and assets substantially comparable to take any of coverages existing on the actions described in clauses date hereof;
(17) Within (i) through forty five (xxi45) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier days of the Closing or close of each month after the termination execution of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not make available to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) the Purchaser a preliminary balance sheet and income statement for the Company disclosing the financial position and results of operations of the Parent Disclosure Schedule, Company for the preceding month and year-to-date; and
(318) as may be required by applicable Legal RequirementsThe Company shall not enter into, or (4) as expressly required by this Agreementmodify, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) contract with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessRelated Party.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from From the date of this Agreement through hereof and until the Effective Time or earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2w) as set forth in Section 4.1(a6.1(a) of the Company Disclosure ScheduleLetter, (3x) as may be required by applicable Legal Requirements, otherwise expressly contemplated or (4) as expressly required permitted by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (Ay) to the extent consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that Parent shall otherwise give have the right to withhold its prior consent in writing for any reason or no reason if its consent is sought for purposes of clauses (in the case of subsections i), (ii), (iii), (iv), (viv), (viii), (ix), (xxi), (xii), (xiii), (xv) or (xvi) or clause (xviii) (but only as it relates to any of the foregoing clauses) or (z) as required by applicable Law, the Company shall, and shall cause its Subsidiaries to, cause the business of it and its Subsidiaries to be conducted in the ordinary course and it shall, and shall cause its Subsidiaries, to use their respective commercially reasonable efforts to preserve their business organizations and real property intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, employees and business associates (xvii) it being understood and agreed that adverse changes in the Company’s business, real property and existing relations and goodwill that result from or are caused by the announcement of the transaction, the identity of Parent or its affiliates and the plans of Parent with respect to operating the Company that have been disclosed to the public or to employees, suppliers, customers, distributors or business associates of the Company shall not constitute, or be taken into account in determining whether there has been, a breach by the Company of its obligation under this Section 4.1(a6.1). Notwithstanding the generality of the foregoing, such consent not and subject to be unreasonably withheld, conditioned or delayedthe exceptions set forth in clauses (w), (Bx), (y) as set forth in Section 4.1(aand (z) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementimmediately preceding sentence, the Company shall not (not, and shall cause its Subsidiaries not permit any Company Subsidiary to)::
(i) amend the Company’s Organizational Documents certificate of incorporation, bylaws or amend comparable governing documents of the Organizational Documents Company or any of any Company Subsidiaryits Subsidiaries;
(ii) splitissue, combinesell, subdividepledge, change, exchange, amend the terms dispose of or reclassify encumber any shares of the Company’s capital stock stock, voting securities, partnership interest, membership interest or similar interest or any option, warrant, right or security convertible, exchangeable or exercisable therefor or other equity interests instrument or right the value of which is based on any of the foregoing (collectively, “Equity Interests”) of the Company or any of its Subsidiaries (including any Company SubsidiaryStock Options or Company Restricted Stock), other than (A) issuance of Shares pursuant to Company Stock Options outstanding on the date hereof under the Company Plans, (B) issuance or disposition of any Equity Interest of any of the Company’s Subsidiaries to the Company or any other of its Subsidiaries, or (C) issuances of securities in connection with grants or awards of stock-based compensation made in accordance with Section 6.1(a)(vii) hereof;
(iii) split, combine, subdivide or reclassify any of its Equity Interests;
(iv) declare, set aside, make establish a record date for, or pay any dividend dividends on or make any other distribution distributions (whether payable in cash, stock stock, property or propertya combination thereof) with in respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiaryof its Equity Interests, other than any dividends or distributions only to from any wholly-owned Subsidiary of the extent paid by any wholly owned Company Subsidiary to the Company or to another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation such Subsidiary of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.;
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company Options;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s its Equity Interests, except for redemptions, purchases or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company acquisitions pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Stock Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment ofof Company Restricted Stock, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, termination, change in of control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (and other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently contractual rights existing Vice President or higher position that becomes vacant after on the date of this Agreement, and, notwithstanding anything to hereof on the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan terms in effect on the date hereof; (5) increases , including with respect to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure ScheduleRestricted Stock;
(xvi) incur or modify in material respects the terms of, any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person for borrowed money, except for (i) indebtedness for borrowed money in a principal amount not to exceed $250,000, (ii) letters of credit issued in the ordinary course of business, or (i)(Aiii) amend or terminate (except for terminations pursuant indebtedness owed by any wholly-owned Subsidiary of the Company to the expiration Company or any other wholly-owned Subsidiary of the existing term of any Material ContractCompany;
(vii) any Material Contract or (i) except (A) to the extent required by applicable Law, (B) waiveto the extent permitted by written agreements existing on the date of this Agreement that have been disclosed or made available to Parent, release and/or (C) as listed in Section 6.1(a)(vii) of the Company Disclosure Letter, grant or assign announce any material rights under stock option, equity or incentive awards or increase in the salaries, bonuses or other compensation and benefits payable by the Company or any Material Contractsof its Subsidiaries to any of the employees, officers, directors or other service providers of the Company or any of its Subsidiaries, (ii) enter into hire any Contract new employees (other than clerical employees), (iii) except to the extent required by applicable Law or required by written agreements existing on the date of this Agreement that have been disclosed or made available to Parent, pay or agree to pay any pension, retirement allowance, termination or severance pay, bonus or other employee benefit not required by any existing Company Plan or other agreement that, if or arrangement in effect on the date of this AgreementAgreement to any employee, would constitute a Material Contract;
(xi) change officer, director or other service provider of the Company or any of its methods Subsidiaries, whether past or present, or take any action to accelerate vesting of financial accounting any right to compensation or accounting practices in any material respect other than as benefits, (iv) except to the extent required by changes in GAAP;
(xii) make (applicable Law or permitted by written agreements existing on the date of this Agreement that have been disclosed or made available to Parent, enter into or amend any Contracts of employment or any consulting, bonus, severance, retention, retirement or similar agreement, except for elections made agreements for newly hired employees and retirement agreements entered into in the ordinary course of business, or (v) except as required to ensure that any Company Plan is not then out of compliance with applicable Law, enter into or adopt any new or renew, amend or terminate any existing Company Plan or benefit arrangement if such adoption, renewal, amendment or termination would result in a material cost to the Company or any of its Subsidiaries;
(viii) other than in the ordinary course of business (so long as any action taken in the ordinary course of business is consistent with past practice and would not have the effect of materially increasing the Tax liability of the Company or any of its Subsidiaries or materially decreasing any Tax attribute of the Company or any of its Subsidiaries), make or change or revoke any material Tax election, adopt or change any Tax accounting period the Company’s or material such Subsidiary of the Company’s method of accounting for Tax accountingpurposes, amend file any material amended Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of TaxesReturn, enter into any agreement with a Governmental Entity material closing agreement, settle any material Tax claim or assessment relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request the Company or any Tax ruling from any Governmental Entityof its Subsidiaries, surrender any right to claim a material refund of Taxes, orconsent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or any of its Subsidiaries, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax;
(ix) except as required by GAAP, the SEC or applicable Law, change any material accounting policies, principles or practices;
(x) except as contemplated or permitted by this Section 6.1, (i) enter into or assume any Contract that would have been a Company Material Contract had it been entered into prior to the date hereof, or (ii) terminate, materially amend or waive any material rights under any Company Material Contract or any Contract that would have been a Company Material Contract had it been entered into prior to the date hereof excluding any termination upon expiration of a term in accordance with the terms of such Company Material Contract; provided in each case that the Company and any of its Subsidiaries shall be permitted to renew or replace any Company Material Contract with one or more Contracts on substantially similar or better terms;
(xi) (A) settle or compromise any action, litigation, claim or arbitration, or (B) implement any settlement or compromise of any action, litigation, claim or arbitration other than in accordance with the expressed terms of such settlement or compromise as in effect as of the date hereof; provided, however, that the Company shall not breach any material term of any settlement or compromise and shall not make any material discretionary decisions or take any material discretionary actions relating to the implementation of such settlement or compromise;
(xii) acquire (including by merger, consolidation, or acquisition of stock or assets) any interest in any Person or any division thereof or any assets thereof, excluding acquisitions of supplies, parts, fuel, materials and other inventory in the ordinary course of businessbusiness consistent with past practice, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) make any loan, advance or capital contribution to, or investment in, any Person or any division thereof, other than consignment (i) any such acquisitions, loans, advances, contributions or investments that are for consideration not in excess of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company $100,000 individually or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to $250,000 for all other Non-Budgeted Capital Expenditures made such transactions by the Company and the Company its Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (Aii) any special meeting of such acquisitions, loans, advances, contributions or investments made pursuant to any Contract entered into after the Company’s shareholders other than date hereof in accordance with this Section 6.1 or (iii) loans, advances or capital contributions to or among the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly and wholly-owned Company Subsidiaries;
(xviixiii) settle sell, transfer, lease, license, assign, abandon, fail to maintain or compromise otherwise dispose of (including, by merger, consolidation, or sale of stock or assets) any litigationentity, claimbusiness, suitassets (including material Intellectual Property), action rights or proceedingproperties of the Company or any of its Subsidiaries having a current value in excess of $100,000 individually, except or $250,000 for settlements all such transactions by the Company and its Subsidiaries in the aggregate, or compromises otherwise material to the business of the Company or any of its Subsidiaries, other than (Ai) the paymentsales, discharge transfers, leases, licenses assignments and other dispositions of inventory or satisfactionother assets, including real property, in the ordinary course of business in a manner consistent with past practice, (ii) pursuant to Contracts entered into after the date hereof in accordance with this Section 6.1, (iii) dispositions of liabilities reflected obsolete or reserved against in worthless assets or properties or (iv) transactions solely among the Most Recent Company Balance Sheetand/or any Company Subsidiaries;
(xiv) authorize or make any capital expenditure, other than (A) any capital expenditure contemplated by the Company’s business plan set forth on Section 6.1(a)(xiv) of the Company Disclosure Letter or (B) those capital expenditures that do not are not, in the aggregate, in excess of $250,000 above the capital expenditures provided for in such business plan;
(xxv) impose any injunctive relief on the Company adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of such party or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company SubsidiarySubsidiaries;
(xviiixvi) materially reduce the amount of insurance coverage subject to Section 6.2, take any action or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail omit to take or cause any action that is reasonably likely to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers Offer set forth in ARTICLE V Exhibit A not being satisfied; or;
(xxiixvii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner Contract that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair restricts the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company or any or its Subsidiaries, taken as a whole, to compete, in any material respects, with any business or in any geographic area, or to solicit customers, except for use or radius restrictions that may be contained in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory Contracts entered into in the ordinary course of business; or
(3xviii) inbound licenses knowingly commit, authorize or agree to take any of the foregoing actions or enter into any letter of intent (binding or non binding) or similar agreement or arrangement with respect to any of the foregoing actions.
(b) Neither Parent nor Merger Sub shall knowingly take or permit any of their affiliates to take any action that is reasonably likely to prevent or delay the consummation of the Offer, the Merger or the other grants transactions contemplated by this Agreement.
(c) Nothing contained in this Agreement is intended to give Parent or assignments Merger Sub, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Intellectual Property Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
(d) The Company shall promptly give Parent written notice upon obtaining Knowledge of any material event, development or occurrence that would reasonably be expected to give rise to a failure of the condition precedent set forth in the ordinary course clause (A) of businessparagraph (iii) of Exhibit A.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) Except as set forth in Section 4.1(a) the correspondingly numbered sections of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, law or (4) as otherwise expressly required contemplated by this Agreement, the Company covenants and agrees that, prior to the Effective Time (unless Parent shall otherwise consent, which consent shall not be unreasonably withheld and provided that, with respect to clause (ii) of paragraph (e), if Parent shall not have responded within two business days to a written request by the Company for consent then Parent shall be deemed to have consented to the action that was the subject of the request) the Company shall, and shall cause the Company Subsidiaries its Subsidiary to, use commercially reasonable efforts to :
(a) conduct its business their respective businesses only in the ordinary and usual course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreementand, except (A) to the extent Parent shall otherwise give its prior consent in writing consistent therewith, use their respective best efforts to preserve their respective business organization intact and maintain their respective existing relations with customers (in the case of subsections (ivexcept as contemplated hereby), suppliers, employees and business associates;
(vi), (viii), (ix), (x), (xii), (xiii), and (xviib) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of create any Company Subsidiary;
subsidiaries; (ii) amend their respective certificate of incorporation or by-laws; (iii) split, combine, subdivide, change, exchange, amend the terms of combine or reclassify any shares of the Company’s their outstanding capital stock or other equity interests of the Company or any Company Subsidiary;
(iiiiv) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than any dividends or distributions only to the extent paid by any wholly owned Company the Subsidiary to the Company or another wholly owned Company SubsidiaryCompany;
(ivc) acquire not (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwisei) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any material assets except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant pledge, dispose of or otherwise permit to become outstanding encumber any additional shares of, or securities convertible or exchangeable for, or options, warrants warrants, calls, commitments or rights of any kind to acquire, any shares of its their capital stock of any class or any other equity interests, property or assets other than (x) shares of Company Common Stock issuable upon exercise of purchase rights outstanding as of the date of this Agreement under the 1999 Stock Purchase Plan (as such plan is in effect on the date hereof) or (y) shares of Company Options;
Common Stock issuable pursuant to the exercise of Company Options outstanding on the date hereof under the Company Stock Option Plans or (z) shares of Company Common Stock issuable pursuant to the 401(k) Plan; (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber (each a "transaction") any assets, including, without limitation, all intellectual property and technology rights which it owns or uses, or enter into any collaboration; (iii) incur or modify any indebtedness; (iv) incur or modify any other liability other than in the ordinary and usual course of business; (v) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company; or (vi) except authorize capital expenditures in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any excess of its material tangible property or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company$100,000 per calendar quarter or, other than: (A) sales than the acquisition of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets inventory and supplies in the ordinary course of business consistent with past practice; , make any acquisition of, or investment in, assets or stock of any other person or entity (B) pursuant to written Contracts or commitments existing as including any in-licensing of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viiitechnology); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viid) directly not change or indirectly repurchaseincrease the compensation payable or to become payable to its directors, redeem officers or otherwise acquire employees, or pay any shares performance based bonuses to its employees for the year ended 2001 (other than bonuses and increases in salary in an amount not to exceed $300,000 in the aggregate and provided that the Company would otherwise, after giving effect to the payment of such bonuses, meet the condition to the consummation of the Company’s or any Company Subsidiary’s capital stock or equity interestsOffer set forth in paragraph (f) of Exhibit A hereto), or any other securities or obligations convertible grant (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company except pursuant to the exercise of repurchase rights existing contractual arrangements disclosed in writing to Parent prior to the date of this Agreement; hereof) any severance or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defeasetermination pay to, or cancel enter into any indebtedness for borrowed moneyemployment or severance agreement with, guarantee any such indebtednessdirector, issue officer or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or its Subsidiary; and not establish, adopt, enter into, make any Company Subsidiarynew grants or awards under or amend, (C) grant any rights to severancecollective bargaining, retentionbonus, change in control profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or termination pay to any member of other plan, agreement, trust, fund, policy or arrangement for the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment benefit of any employee of the Company directors, officers or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleemployees;
(xe) except in the ordinary course of businessnot (i) settle or compromise any material claims or litigation or modify, (i)(A) amend or terminate (except for terminations pursuant to the expiration any of the existing term of any Material Contract) any Material Contract their material Contracts or (B) waive, release or assign any material rights under any Material Contracts, or claims or (ii) enter into any Contract with respect to the Company's San Diego facility contract services business pursuant to which the Company would provide any products or agreement that, if in effect on the date of this Agreement, would constitute a Material Contractservices;
(xif) change not amend or modify, or waive, release or assign any of its methods the Company's rights under, the License Agreement, dated as of financial accounting September 22, 1998, by and between the Company and Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. (the "HMR License") or accounting practices in any material the Company's investigational new drug application with respect other than as required by changes in GAAPto tezacitabine;
(xiig) not make (except for elections made in the ordinary course of business), change or revoke any material Tax tax election, change any Tax accounting period or material method of Tax accounting, amend file any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise taking any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent position inconsistent with past practice, of liabilities reflected settle any tax audit, claim or reserved against in the Most Recent Company Balance Sheetlitigation, request any private letter or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve similar ruling or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a).tax closing agreement;
(bh) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing not permit any insurance policy naming it as a beneficiary or the termination of this Agreementa loss payable payee to be canceled or terminated without notice to Parent, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary and usual course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):; and
(i) amend Parent’s not authorize or either enter into an agreement to do any of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessforegoing.
Appears in 1 contract
Interim Operations. 1
(a) The Company covenants and agrees as to itself and its Subsidiaries that, during from and after the period execution of this Agreement and prior to the Effective Time (unless Parent shall otherwise approve in writing and except as (i) required by applicable Law, (ii) expressly required by this Agreement or (iii) otherwise expressly disclosed in Section 6.1 of the Company Disclosure Letter), the Company shall use its commercially reasonable efforts to (A) conduct its business and the business of its Subsidiaries in the ordinary course of business consistent with past practice and (B) maintain the status of the Company as a “real estate investment trust” within the meaning of Sections 856 through and including 860 of the Code (a “REIT”) for all taxable periods ending on or prior to the Closing Date. Without limiting the generality of, and in furtherance of, the foregoing, the Company covenants and agrees as to itself and its Subsidiaries that, from and after the date of this Agreement through and prior to the earlier of the Closing or the termination of this AgreementEffective Time, except as (1w) to the extent required by applicable Law, (x) Parent shall otherwise give its prior consent may approve in writing (such consent approval not to be unreasonably withheld, conditioned or delayeddelayed with respect to clauses (d), (2f), (h), (i), (m), (n), (p), (r) as set forth or (s)), (y) expressly disclosed in Section 4.1(a) 6.1 of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Letter or (4z) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business provided for in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall will not permit any Company Subsidiary of its Subsidiaries to)::
(a) (i) amend the Company’s Organizational Documents amend, supplement or amend the Organizational Documents otherwise modify its articles of any Company Subsidiary;
incorporation or bylaws (or comparable governing documents), (ii) split, combine, subdivide, change, exchange, amend the terms of subdivide or reclassify any its outstanding shares of the Company’s capital stock or other equity interests (except for any such transaction by a wholly owned Subsidiary of the Company or any Company Subsidiary;
which remains a wholly owned Subsidiary after consummation of such transaction), (iii) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, stock or propertyproperty (or any combination thereof) with in respect to of any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, (other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any dividends or distributions paid by a direct or indirect wholly owned Subsidiary of the Company (other Personthan a Taxable REIT Subsidiary) to another direct or indirect wholly owned Subsidiary of the Company or to the Company, (B) regular quarterly cash dividends not to exceed $0.15 per Share, with customary record and payment dates on the Shares in accordance with past practice (including, for the avoidance of doubt, any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsdividends or distributions declared and publicly announced on or prior to the date hereof), (C) any business distributions of the Company and its Subsidiaries, including under Sections 857, 858 or division 860 of another the Code, as may be reasonably necessary to (I) maintain the status of the Company as a REIT or (II) avoid or reduce the imposition of any corporate level Tax or excise Tax under the Code and (D) dividend equivalents payable upon the vesting or settlement of Company Director-Granted RSUs, Company Service-Based RSUs and Company Market-Based RSUs), (iv) enter into any agreement with respect to the voting of its capital stock or (v) purchase, repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible or exchangeable into or exercisable for any shares of its capital stock, other than (A) pursuant to the cashless exercise of Company Options or the forfeiture of, or withholding of Taxes with respect to, Company Options, Company Director-Granted RSUs, Company Service-Based RSUs or Company Market-Based RSUs in connection with any Taxable event related to such awards, in each case, in accordance with past practice and with the terms of the applicable Company Stock Plan as in effect on the date of this Agreement or (B) purchases, repurchases, redemptions or other acquisitions of securities of any wholly owned Subsidiary of the Company by the Company or any other wholly owned Subsidiary of the Company;
(b) merge or consolidate with any other Person, or restructure, reorganize or completely or partially liquidate;
(Di) any material assets exceptexcept as required by the terms of a Company Plan, (1A) acquisitions by increase the compensation or benefits payable to any current or former employee, director or individual service provider of the Company from or any wholly owned of its Subsidiaries with an annual base salary greater than $100,000, (B) materially increase the compensation or benefits payable to any current or former employee, director or individual service provider of the Company Subsidiary or among any wholly owned of its Subsidiaries with an annual base salary less than $100,000 or (C) become a party to, establish, adopt, amend, or make any change to any Company Subsidiaries; (2) Plan or any arrangement that would have been a Company Plan had it been entered into prior to the purchase date of equipmentthis Agreement, supplies and inventory other than related to annual plan renewals in the ordinary course of business or (3ii) inbound licenses grant or make any bonus or other grants payment to any employee, director, executive officer or assignments individual service provider of Intellectual Property in the ordinary course of businessCompany or its Subsidiaries;
1 Note to W&S: Subject to ongoing review by the Company.
(vd) except in connection hire any employees with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interestsan annual base salary greater than $100,000, other than shares of Company Common Stock issuable upon exercise of outstanding Company Optionsany non-officer employees that are hired to replace any employees that were terminated or that resigned and that are provided total compensation and benefits substantially similar, in the aggregate, to the terminating employees being replaced;
(vie) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on Indebtedness or issue any of its material tangible property warrants or tangible assetsother rights to acquire any Indebtedness, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (Ai) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; , borrowings under the Existing Credit Facilities as in effect as of the date hereof, (ii) inter-company Indebtedness among the Company and its wholly owned Subsidiaries, (iii)(A) to the extent not drawn upon and payments are not triggered thereby, letters of credit, bank guarantees, security or performance bonds or similar credit support instruments and (B) overdraft facilities or cash management programs, in each case issued, made or entered into in the ordinary course of business or (iv) hedging in compliance with the hedging strategy of the Company as of the date of this Agreement in the ordinary course of business consistent with past practice and not for speculative purposes; provided, that the Company and its Subsidiaries shall use commercially reasonable efforts to mitigate any material increase in their respective aggregate exposure to currency risk;
(f) make or commit to any capital expenditures other than in the ordinary course of business consistent with past practice and which do not exceed the amounts per line item reflected in the Company’s monthly capital expenditure projections for 2020 (pro-rated for any partial months during such period), which have previously been made available to Parent;
(g) other than with respect to (i) Contracts related to any REO Properties and (ii) other Company Properties that are set forth in Section 6.1(g) of the Company Disclosure Letter, in each case so long as such transactions are on bona fide, commercial, arms’ length terms to an unaffiliated party, transfer, lease (other than renewals and single-family home leases with tenants in the ordinary course of business consistent with past practice), license, sell, assign, mortgage, pledge, place a Lien (other than Permitted Liens) upon or otherwise dispose of any properties or assets (including capital stock of any of its Subsidiaries but not including any Intellectual Property), (x) with a fair market value in excess of $200,000 individually or $2,000,000 in the aggregate (other than transactions among the Company and its wholly owned Subsidiaries) but for the avoidance of doubt subject in all respects to the additional restrictions of Section 6.15(a) with respect to Subject Company Properties, (y) that secure any of the Existing Credit Facilities other than to the extent the disposition thereof is permitted by the relevant Existing Credit Facility but for the avoidance of doubt subject in all respects to the additional restrictions of Section 6.15(a) with respect to Subject Company Properties, or (z) that would reasonably be expected to interfere with Merger Sub’s ability to obtain the Debt Financing; provided, that other than with respect to properties or assets referred to in clauses (i) and (ii) above, the Company shall promptly (and in any event within twenty-four (24) hours) deliver to Parent written notice of any license, sale, assignment, mortgage, pledge, or other disposition of any Company Properties;
(h) issue, deliver, sell, grant, transfer, or encumber, or authorize the issuance, delivery, sale, grant, transfer or encumbrance of, any shares of its capital stock or any securities convertible or exchangeable into or exercisable for, or any options, warrants or other rights to acquire, any such shares, except (i) for any Shares issued pursuant to written Contracts Company Options, Company Director-Granted RSUs, Company Service-Based RSUs and Company Market-Based RSUs outstanding on the date of this Agreement in accordance with the terms of such awards and the Company Stock Plans, and (ii) by wholly owned Subsidiaries to the Company or commitments existing to any other wholly owned Subsidiary of the Company;
(i) other than pursuant to the agreements forth in Section 6.1(i) of the Company Disclosure Letter, acquire any business or assets or other property, whether by merger, consolidation, purchase of property or assets or otherwise;
(j) make any material change with respect to its financial accounting policies or procedures, except as required by changes in GAAP (or any interpretation thereof) or by applicable Law;
(k) enter into any new line of business or start to conduct a line of business of the Company or any of its Subsidiaries that is not conducted as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(viil) directly make any loans, advances or indirectly repurchasecapital contributions to, redeem or otherwise acquire investments in, any shares Person (other than loans, advances or capital contributions to the Company or any direct or indirect wholly owned Subsidiary of the Company’s );
(i) amend or modify in any Company Subsidiary’s capital stock material respect or equity interests, terminate (excluding terminations upon expiration of the term thereof or upon default by any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interestsparty thereto, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicableeach case, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material Contract) any Material Contract or (B) waive, release or assign any material rights rights, claims or benefits under any Material ContractsContract or take (or fail to take) any action that would reasonably be expected to cause or result in a material breach of, or material default under, any Material Contract or (ii) enter into any Contract or agreement that, if in effect on that would have been a Material Contract had it been entered into prior to the date of this AgreementAgreement unless it is on terms substantially consistent with, would constitute or on terms more favorable to the Company or its Subsidiaries (and to Parent and its Subsidiaries following the Closing) than, either a Contract it is replacing or a form of such Material ContractContract made available to Parent prior to the date hereof; provided, this Section 6.1(m) shall not prohibit or restrict any action in respect of (A) Company Plans or (B) the Existing Lender Consents (as defined in Section 6.1(m) of the Company Disclosure Letter);
(xin) change (A) settle any Proceeding before or threatened in writing to be brought before a Governmental Entity, other than settlements if the amount of any such settlement is not in excess of $250,000 individually or $1,000,000 in the aggregate; provided, that such settlements do not involve any non-de minimis injunctive or equitable relief or impose non-de minimis restrictions on the business activities of the Company and its Subsidiaries or Parent and its Subsidiaries or (B) waive any material right with respect to any material claim held by the Company or any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAPSubsidiaries;
(xiio) make enter into any collective bargaining agreement or recognize or certify any labor union, labor organization or other employee representative body as the bargaining representative for any employees of the Company or any of its Subsidiaries;
(except for elections made in the ordinary course of business)p) make, change or revoke any material Tax election, election or change any Tax accounting period or a material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityReturn, settle or compromise any material liability for Taxes or any Tax liability, audit, claimproceeding, claim or other proceeding relating to a material amount of Taxesassessment, enter into any Tax allocation, sharing or indemnity agreement with a Governmental Entity relating to Taxes if such (other than customary provisions in agreements or arrangements the primary subject of which is not Taxes), enter into any closing agreement would reasonably be expected to result in a respect of material Tax liabilityTaxes, seek or request any material Tax ruling from any a Governmental Entity, surrender file any right to claim a material refund of Taxes, or, Tax Return inconsistent with past practice other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements Law or the Company’s Organizational Documents, convene (A) contribute any special meeting of the Company’s shareholders other than the Company Shareholder Meeting or (B) any other meeting of the Company’s shareholders assets to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Taxable REIT Subsidiary (other than confidentiality obligationsany assets that are expected to be sold prior to the Closing Date and are otherwise permitted to be sold prior to the Closing Date pursuant to the terms of this Agreement), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxiq) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses cause (i) through the Company to fail to qualify as a REIT or (xxiii) of this Section 4.1(a).
(b) Parent agrees that, during the period from the date of this Agreement through the earlier any other Subsidiary of the Closing or the termination of this Agreement, except (1) Company to the extent the Company shall otherwise give fail to preserve its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) status as set forth in Section 4.1(b5.1(b)(iv) of the Parent Company Disclosure ScheduleLetter;
(r) terminate, (3) as may be required by applicable Legal Requirementscancel or make any material changes to the structure, limits or terms and conditions of any of its insurance policies, including allowing the policies to expire without renewing such policies or obtaining comparable replacement coverage, or prejudicing rights to insurance payments or coverage;
(4s) as expressly required sell, assign, transfer or exclusively license any material Intellectual Property owned by this Agreementthe Company or any of its Subsidiaries, Parent shallor permit the lapse of any right, and shall cause the Parent Subsidiaries totitle or interest to any such material Intellectual Property, use commercially reasonable efforts to conduct its business including any material Registered IP, in each case, other than in the ordinary course of business;
(t) take any of the actions set forth on Section 6.1(t) of the Company Disclosure Letter; or
(u) agree, resolve or commit to do any of the foregoing. Parent agrees thatNotwithstanding the foregoing, during nothing in this Section 6.1 shall prohibit the Company or any of its Subsidiaries from taking any action or refraining from taking any action, at any time or from time to time, that in the reasonable judgment of the board of directors of the Company, upon written advice of nationally recognized REIT Tax counsel, is reasonably necessary for the Company to avoid incurring entity-level U.S. federal income or U.S. federal excise Taxes under the Code or to maintain its qualification as a REIT for any period from or portion thereof ending on or prior to the date Effective Time, including making dividend or other distribution payments to stockholders of the Company in accordance with this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) subject to the extent the Company shall otherwise give its prior consent in writing, (B) as restrictions set forth in Section 4.1(b) 6.1(a)(iii)); provided, that prior to taking any such action, the Company and its Subsidiaries shall inform Parent in writing of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (such action and shall not permit any consult with and cooperate with Parent Subsidiary to):
(i) amend Parent’s or either in good faith to minimize the adverse effect of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material action to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businessParent.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees thatFrom the date hereof until the earlier of the Closing or termination of this Agreement, during Seller shall (i) operate the period Business only in the Ordinary Course of Business, including maintaining appropriate service levels, and in compliance with applicable Law including any COVID-19 Measures; and (ii) use commercially reasonable efforts to (A) maintain and preserve intact the business organization and goodwill of the Business, the Assets and the Assumed Liabilities, (B) maintain satisfactory relationships with Seller’s clients, operators, distributors, customers, insurance underwriters and other third parties having business dealings with Seller, (C) pay its debts and Taxes when due (subject to good faith disputes regarding such debts and Taxes for which reserves have been established) and pay or perform, in all material respects, other obligations when due, (D) maintain in effect all Permits and (E) maintain good relations with, and keep available the services of, the Business Employees.
(b) Without limiting the generality of the foregoing, except as set forth in Section 5.1(b) of the Disclosure Schedule, as expressly permitted by this Agreement or as approved in writing by ▇▇▇▇▇, from the date of this Agreement through hereof until the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent Seller shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in take any action which would require disclosure on Section 4.1(a) 2.8 of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv), (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B) as set forth in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):Schedule or:
(i) amend take or omit to take any action that results or may reasonably be expected to result in any of the Company’s Organizational Documents representations and warranties of Seller or amend the Organizational Documents Beneficial Owners set forth herein being or becoming untrue in any material respect or in any of any Company Subsidiarythe conditions set forth herein not being satisfied;
(ii) split, combine, subdivide, change, exchange, amend or otherwise change the terms organizational documents of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company SubsidiarySeller;
(iii) (A) authorize, issue, sell or transfer any membership interests or other securities of Seller, (B) adjust, split, combine or reclassify or otherwise amend the terms of any membership interest or other security of Seller, (C) declare, authorize, set aside, aside make or pay any dividend or other distribution (whether payable in cash, stock or other property) or (D) enter into any agreement with respect to any shares of the Company’s capital stock or the capital stock or other equity interest voting of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company Subsidiaryequity of Seller;
(iv) (A) merge or consolidate with any other Person, acquire any business or assets of any other Person (whether by merger, consolidationstock purchase, operation of law, acquisition of stockasset purchase or other business combination), other equity interests than the purchase of supplies in the Ordinary Course of Business or assets, formation of a joint venture or otherwise(B) form any new Subsidiary;
(v) (A) materially change the operation of the Business, Assets or the Assumed Liabilities or any method of purchase, sale, lease, management, marketing, promotion or operation, except such changes as may be required to comply with any Law or the terms of this Agreement or (B) enter into a new line of business or abandon or discontinue an existing line of business;
(vi) make any loans, advances or capital contributions to, or investments in, any Person (other Personthan advances of expenses to Business Employees in the Ordinary Course of Business);
(vii) (A) institute or announce any increase in the compensation, bonuses or other benefits payable to any Business Employees, (B) enter into, amend or waive any equity interest in rights under any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)employment, consulting, severance or change of control agreement with any Business Employee, (C) grant any business severance or division termination pay (cash, equity or otherwise) to any Business Employee, (D) enter into, adopt, amend or terminate any Employee Benefit Plan or (E) hire any Business Employee or terminate or transfer any Business Employee (other than for cause);
(viii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of another Personor incur any Lien on or otherwise encumber any Assets, other than in the Ordinary Course of Business;
(ix) acquire any real property or undertake or commit to undertake capital expenditures for the purchase of equipment or tangible assets exceeding $35,000 in the aggregate;
(x) agree to, request or adopt (A) any moratorium or suspension of payment of any Indebtedness, (B) the appointment of a receiver, administrator, liquidator, assignee, trustee or other similar official with respect to Seller, (C) an assignment for the benefit of creditors or an admission in writing of the inability of Seller to pay its debts as they become due, or (D) any material assets except, other thing under any applicable Law relating to bankruptcy or insolvency with similar effect as any of the foregoing (1A) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; through (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company OptionsC);
(vixi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property Indebtedness or tangible assets, except for Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; (B) pursuant to written Contracts or commitments existing as of the date of this Agreement; or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or warrants or other rights to acquire any debt securities (directlyof Seller or assume, contingently guarantee or endorse, as an accommodation or otherwise) or make , the obligations of any loans Person for Indebtedness or capital contributions to obligations, in the case of any other Person, except for any indebtedness among of the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)foregoing;
(ixxii) (A) adopt, terminate cancel any debts owed to or amend any Company Plan except to the extent permitted claims held by clauses (B), (C), (D) or (E) Seller in excess of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Board, current employee, or former employee of the Company or any Company Subsidiary, (C) grant any rights to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); except, in each case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent with past practice; (4) increases in compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule35,000;
(xxiii) except in abandon, disclaim, dedicate to the ordinary course public, sell, assign or grant any security interest in, to or under any Business Intellectual Property or Business IP Agreement;
(xiv) disclose any confidential or proprietary information or confidential Business Intellectual Property to any Person, other than employees of business, (i)(A) amend Seller that are subject to a confidentiality or terminate (except for terminations non-disclosure covenant protecting against further disclosure thereof or to other contractors or representatives of Seller who are similarly subject to such an obligation of confidentiality and non-disclosure pursuant to a written agreement with the expiration Seller;
(xv) revalue any of the existing term assets of any Material Contract) any Material Contract or (B) waivethe Seller, release or assign any material rights under any Material Contractsexcept as required by GAAP, or (ii) enter into into, or permit any of the assets of the Seller to become bound by any Contract that is or agreement that, if in effect on the date of this Agreement, would constitute a Material Contract;
(xixvi) (A) change any method of its methods of financial accounting or accounting practices practice, other than changes required under applicable Law or GAAP or (B) fail to maintain the Seller’s books, accounts and records in the Ordinary Course of Business;
(xvii) make, revoke or change any material respect Tax election by Seller that could adversely impact the amount of Taxes due or payable (and/or any direct or indirect owner of equity interests in Buyer) after the Closing Date;
(xviii) modify, amend or terminate (other than pursuant to the expiration of its term other than as required a result of any action taken by changes Seller, or other than as a result of a material breach by the counterparty thereto) any Contract currently in GAAPeffect or termination release or assign any material rights or claims thereunder;
(xiixix) fail to pay any required maintenance or other similar fees or otherwise fail to make required filings or payments required to maintain and further prosecute any applications for registration of Owned Intellectual Property or otherwise abandon, let lapse or fail to protect any Owned Intellectual Property;
(except for elections made in the ordinary course of business), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liabilityxx) commence, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of TaxesProceeding;
(xiiixxi) other than consignment of Company Products in the ordinary course of businesscancel, make materially reduce or fail to maintain any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000insurance policy;
(xivxxii) except as expressly required by applicable Legal Requirements change or modify the CompanySeller’s Organizational Documentscredit, convene collection, or payment policies, procedures or practices, including acceleration of collections or receivables (Awhether or not past due) in any special meeting of the Company’s shareholders other than the Company Shareholder Meeting material respect or (B) any other meeting of the Company’s shareholders fail to consider a proposal that would reasonably be expected to impair, prevent pay or delay the consummation payment of the transactions contemplated herebypayables or other Liabilities in any material respect;
(xvxxiii) engage in any transaction with any Related Parties; or
(xxiv) authorize or enter into any agreement, commitment or understanding (whether written or arrangement oral) with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary (other than confidentiality obligations), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverage, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
(xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice;
(xxi) take or cause to be taken any action, or knowingly fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to (A) prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or (B) result in any of the conditions to the Mergers set forth in ARTICLE V not being satisfied; or
(xxii) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business
Appears in 1 contract
Sources: Asset Purchase Agreement (Tivic Health Systems, Inc.)
Interim Operations. 1
(a) The Company agrees thatExcept as (x) required by applicable Law, during the period from the date of (y) otherwise expressly contemplated or expressly required by this Agreement through the earlier of the Closing or the termination of this Agreement, except (1z) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), (2) as set forth in Section 4.1(a) of the Company Disclosure ScheduleLetter, (3) the Company covenants and agrees that, commencing on the date hereof and ending at the Effective Time or such earlier date as this Agreement may be required by applicable Legal Requirementsterminated in accordance with its terms, unless Parent shall otherwise approve in writing, such approval not to be unreasonably withheld, delayed or (4) as expressly required by this Agreementconditioned, the Company shall, and shall cause the Company its Subsidiaries to, conduct their respective businesses in the ordinary course and, to the extent consistent therewith, use their respective commercially reasonable efforts to conduct preserve their respective business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, employees and business associates. Without limiting the generality of the foregoing and in furtherance thereof, commencing on the date hereof and ending at the Effective Time or such earlier date as this Agreement may be terminated in accordance with its business terms, except as (A) required by applicable Law, (B) otherwise expressly contemplated or expressly required by this Agreement or (C) otherwise set forth in the ordinary course of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of the Company Disclosure Schedule) will not constitute a violation of the foregoing. During the period from the date of this Agreement through the earlier of the Closing or the termination of this AgreementLetter, except (A) to the extent unless Parent shall otherwise give its prior consent approve in writing (writing, such approval not to be unreasonably withheld, delayed or conditioned, except in the case cases of subsections clauses (i), (ii), (iii), (iv), (v), (vi), (viii), (ix), (x), (xiixi), (xii)(A) or (B), (xiii) or (xv) or clause (xviii) (solely to the extent relating to one of the preceding clauses), and (xvii) as to each of this Section 4.1(a), such consent not which Parent shall have the right to be unreasonably withheld, conditioned or delayed), (B) as set forth approve in Section 4.1(a) of the Company Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly required by this Agreementits sole discretion, the Company shall will not (and shall will not permit any Company Subsidiary of its Subsidiaries to)::
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiaryotherwise change its governing documents;
(ii) splitmerge or consolidate with any other Person or restructure, combinereorganize or completely or partially liquidate the Company or any of its Subsidiaries;
(iii) issue, subdividesell, changepledge, exchangedispose of, amend the terms of grant, confer, award, transfer or reclassify encumber any shares of the Company’s capital stock or other equity interests of the Company or any its Subsidiaries (other than (A) the issuance of Common Shares upon the exercise of Company SubsidiaryOptions or the vesting of Company Restricted Stock in accordance with their terms or (B) the issuance or transfer of capital stock by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities;
(iiiiv) declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock stock, property or property) otherwise, with respect to any shares of the Company’s its capital stock or the capital stock or other equity interest of any Company Subsidiary, other than (except for dividends or distributions only to the extent paid by any wholly wholly-owned Subsidiary of the Company Subsidiary to the Company or another wholly to any other wholly-owned Company SubsidiarySubsidiary of the Company);
(ivv) acquire (by mergerreclassify, consolidationsplit, operation combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of law, acquisition its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock, other equity interests or assets, formation of a joint venture or otherwise) than (A) the acquisition of any other PersonCommon Shares tendered by Employees or current or former directors in connection with the cashless exercise of Company Options or in order to pay Taxes in connection with the exercise of Company Options or the vesting of Company Restricted Stock, (B) pursuant to the forfeiture of Company Options or Company Restricted Stock or (C) from former employees and directors in accordance with agreements providing for the repurchase of shares of capital stock in connection with any equity interest in termination of services to the Company or any other of its Subsidiaries;
(vi) incur any indebtedness for borrowed money or guarantee such indebtedness of another Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalentsa wholly-owned Subsidiary of the Company), (C) or issue or sell any business debt securities or division warrants or other rights to acquire any debt security of another Person, or (D) any material assets except, (1) acquisitions by the Company from or any wholly owned Company Subsidiary of its Subsidiaries, other than with respect to letters of credit or among any wholly owned Company Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property similar agreements in the ordinary course of business;
1 Note to W&S: Subject to ongoing review (vii) make any material changes in accounting methods, principles or practices, except as required by the Company.
(v) except changes in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than shares of Company Common Stock issuable upon exercise of outstanding Company OptionsGAAP;
(viviii) except as required pursuant to existing written agreements or Benefit Plans in connection with any transaction between effect as of the date hereof, (A) increase the compensation or other benefits payable or to become payable to directors or executive officers of the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property Subsidiaries (except, in the case of a director or tangible assets, except for executive officer of a Subsidiary of the Company Permitted Encumbrances, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets that is not a management-level employee of the Company, other than: (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practice; ), (B) pursuant to written Contracts grant or commitments existing as materially increase any retention, severance or termination pay to, or enter into or materially amend any retention agreement, severance agreement or termination agreement with any director or executive officer of the date Company or any of this Agreement; its Subsidiaries (except, in the case of a director or (C) as security for any borrowings permitted by Section 4.1(a)(viii); or (D) licenses granted to customers or other third parties executive officer of a Subsidiary of the Company that is not a management-level employee of the Company, in the ordinary course of business in a manner consistent with past practice;
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of Company Options or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company Options, as applicable, in accordance with the terms of the applicable award;
(viii) incur (other than draws on existing revolving loans), redeem, repurchase, prepay (other than prepayments of revolving loans), defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or capital contributions to any other Person, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof);
(ix) (A) adopt, terminate or amend any Company Plan except to the extent permitted by clauses (B), (C), (D) enter into or (E) of this Section 4.1(a)(ix), (B) increase, or accelerate the vesting or payment of, the compensation or benefits of materially amend any member of the Company Board, current employee, or former employee employment agreement with any executive officer of the Company or any Company Subsidiary, of its Subsidiaries (C) grant any rights except for employment agreements terminable on less than 30 calendar days’ notice without penalty to severance, retention, change in control or termination pay to any member of the Company Board, current employee or former employee of the Company or any Company Subsidiary, (D) hire or promote any employee at the applicable Subsidiary or to the level of Vice President or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose annual base salary exceeds $100,000 (other than for cause); exceptextent to replace a departing Employee, in each which case, for: (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; (2) hiring any Person for employment (including by means of internal promotion) to fill any currently existing Vice President or higher position that becomes vacant after the date of this Agreement, and, notwithstanding anything to the contrary in this Section 4.1(a)(ix), provide such Person with compensation and benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President only in the ordinary course of business in a manner consistent with past practice; ) or (4D) increases in compensation establish, adopt, enter into or benefits amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or Employees or any of their beneficiaries;
(ix) except as required pursuant to any Company Plan existing written agreements or Benefit Plans in effect on as of the date hereof; , (5A) increases to total target cash opportunities enter into any new, or amend, terminate or renew any existing, bonus or change in control or severance agreement with or for the benefit of any officers, directors or employees of the Company or its Subsidiaries (i.e.except, annual base salary in the case of a director, executive officer or wage rates and target annual cash bonus opportunities) in amounts employee of a Subsidiary of the Company that are is not a management-level employee of the Company, in the ordinary course of business in a manner consistent with past practice; and ), (6B) establish, adopt, enter into, amend, renew or terminate any Benefit Plan, (C) make any deposits or contributions of cash or other property to, or take any other action to fund or in any other way secure the payment of compensation or benefits under, Benefit Plans or agreements subject to Benefit Plans or any other plan, agreement, contract or arrangement of the Company, except to the extent required by Law, such Benefit Plan or any other agreement, contract or arrangement in effect as of the date hereof or in accordance with the ordinary course of business consistent with past practice, or (D) hire or terminate (other than for cause) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Schedule;
(x) employee, except in the ordinary course of business, and except, in the case of each of clauses (i)(AA) amend or terminate through (except for terminations pursuant D), (1) to the expiration extent required by applicable Law, this Agreement, any Benefit Plan or any other agreement in effect as of the existing term date hereof and disclosed in the Company Disclosure Letter, (2) in conjunction with agreements or arrangements that are entered into in the ordinary course of business with new hire employees (other than officers and directors of the Company), and, in the case of any Material Contractindividual who is engaged to replace or succeed a then-current employee (other than officers and directors of the Company), the total target annual cash compensation for such individual may be increased above the level applicable to such replaced or succeeded employee, but only to the extent necessary on a commercially reasonable basis, (3) annual or other scheduled increases in salary, annual bonus targets, hourly wage rates, perquisites and benefits in the ordinary course of business consistent with past practice or (4) to comply with Section 409A of the Code and guidance applicable thereunder to the extent that such action would not reasonably be expected to result in the imposition of a penalty under Section 409A of the Code; provided, however, that, notwithstanding anything herein to the contrary, the Company shall not terminate its Long-Term Incentive Cash Award Plan or make payments thereunder in relation to the transactions contemplated by this Agreement;
(x) grant, confer or award options, convertible securities, restricted stock units or other rights to acquire any capital stock of the Company or any of its Subsidiaries or take any action to cause to be exercisable any otherwise unexercisable Company Option;
(xi) acquire (including by merger, consolidation, business combination, acquisition of stock or assets or otherwise), except in respect of any mergers, consolidations, business combinations or acquisitions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, any Person or any division thereof, or all or substantially all of the assets of any Person in connection with acquisitions or investments, or enter into any agreement, arrangement or understanding with respect to any such acquisition or investment (other than any confidentiality or similar agreements);
(A) other than in the ordinary course of business consistent with past practice, modify or amend in any material respect any Material Contract with a term longer than one (1) year which cannot be terminated without material penalty to the Company or its applicable Subsidiary upon notice of sixty (60) calendar days or less, (B) waive, release or assign any material rights or claims under any Material Contracts, Contract or (iiC) enter into any Contract or agreement that, that if in effect existence on the date of this Agreement, hereof would constitute have been a Material Contract;
Contract (xi) change any of its methods of financial accounting or accounting practices in any material respect other than a renewal or replacement of any existing Material Contract that is expiring by its terms, so long as required by changes in GAAP;
(xii) make (except for elections made the terms and conditions of which renewal or replacement Contract, in the ordinary course of businessaggregate, are not materially less favorable to the Company or its applicable Subsidiary than the existing Material Contract), change or revoke any material Tax election, change any Tax accounting period or material method of Tax accounting, amend any material Tax Return if such amendment would reasonably be expected to result in a material Tax liability, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes if such agreement would reasonably be expected to result in a material Tax liability, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) other than consignment of Company Products in the ordinary course of business, make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Section 4.1(a)(xiii) of the Company Disclosure Schedule (a “Non-Budgeted Capital Expenditure”), except that the Company or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by for transactions among the Company and the Company its wholly-owned Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or among the Company’s Organizational Documentswholly-owned Subsidiaries, convene (A) any special meeting of the Company’s shareholders other than the Company Shareholder Meeting sell, lease, license, transfer, exchange or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impairswap, prevent mortgage or delay the consummation of the transactions contemplated hereby;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company otherwise encumber (including any voting trustsecuritizations), other than with respect or subject to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises other than (A) the payment, discharge or satisfaction, in the ordinary course of business in a manner consistent with past practice, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief on the Company or any Company Subsidiary Lien (other than confidentiality obligationsPermitted Liens), (y) involve the payment of money greater than $100,000 in excess of existing insurance coverageor otherwise dispose of, and (z) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage or fail to renew or maintain any material existing insurance policies;
portion of its properties or assets (xix) (A) amend any Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practice, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practice);
(xxixiv) take file any amendment to any Tax Return or cause make any election relating to be taken Taxes, change any actionelection relating to Taxes already made, adopt or knowingly fail change any accounting method relating to take Taxes, enter into any closing agreement relating to Taxes, settle any claim or cause assessment relating to be taken Taxes or consent to any action, which action claim or failure assessment relating to act Taxes or any waiver of the statute of limitations for any such claim or assessment if any of the foregoing would reasonably be expected to materially increase the Tax liability of the Company and its Subsidiaries or materially reduce a Tax attribute of the Company and its Subsidiaries;
(xv) settle, compromise, discharge or agree to settle any litigation, investigation, arbitration or proceeding other than those that do not involve the payment by the Company or any of its Subsidiaries of monetary damages in excess of $500,000 in the aggregate, after taking into account any applicable reserves and any applicable insurance coverage, and do not involve any material injunctive or other material non-monetary relief or impose material restrictions on the business or operations of the Company or its Subsidiaries;
(xvi) make any capital expenditures, except (A) prevent capital expenditures made in accordance with the Merger from qualifying as a reorganization within the meaning Company’s annual budget and capital expenditure plan, copies of Section 368(a) of the Code which have been previously provided to Parent, or (B) result other capital expenditures in any the ordinary course of business consistent with past practice in an aggregate amount not to exceed One Million Dollars ($1,000,000);
(xvii) solely to the extent that the Company or a Subsidiary of the conditions Company has the right, but not the obligation, whether by Contract or otherwise, to consent to an action by a Physician Practice which would be subject to the Mergers set forth provisions of this Section 4.1(a) (assuming solely for these purposes, that references to a “Subsidiary” instead refer to such “Physician Practice”), grant such consent (it being understood that if the Company or the applicable Subsidiary determines in ARTICLE V not being satisfiedgood faith (after reasonable prior notice to Parent) that it would be unreasonable to withhold its consent to such action, Parent shall be deemed to have consented to such action); or
(xxiixviii) authorize, approve authorize or enter into any written agreement or otherwise make any commitment to take do any of the actions described in clauses (i) through (xxi) of this Section 4.1(a)foregoing.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing Except as otherwise expressly contemplated or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed), (2) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, or (4) as expressly required by this Agreement, Parent shalland Merger Sub covenant and agree that, commencing on the date hereof and ending at the Effective Time or such earlier date as this Agreement may be terminated in accordance with its terms, unless the Company shall otherwise approve in writing, Parent and Merger Sub shall not enter into any agreement, arrangement or understanding that would reasonably be expected to materially prevent, delay or impair the consummation of the transactions contemplated by this Agreement, or propose, announce an intention, enter into any agreement, arrangement or understanding or otherwise make a commitment to take any such action.
(c) Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to Control or direct the Company’s or its Subsidiaries’ operations prior to the Effective Time, and shall cause notwithstanding anything to the contrary contained in this Agreement, no consent of Parent Subsidiaries to, use commercially reasonable efforts or Merger Sub will be required with respect to conduct its business any matter set forth in the ordinary course of business. Parent agrees that, during the period from the date of this Agreement through to the earlier extent the requirement of such consent would violate any applicable Law. Prior to the Closing or Effective Time, the termination Company shall exercise, consistent with the terms and conditions of this Agreement, except (A) to the extent the Company shall otherwise give complete control and supervision over its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company operations and the Company operations of its Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business.
Appears in 1 contract
Interim Operations. 1
(a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent Parent shall otherwise give its prior consent in writing (such consent not to be unreasonably withheld, conditioned or delayed)writing, (2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Requirements or (4) as expressly permitted or required by this Agreement, the Company shall, and shall cause the Company Subsidiaries to, use commercially reasonable best efforts to conduct its business in the ordinary course and use reasonable best efforts to maintain and preserve intact its business organization, keep available the services of business; provided that any action expressly permitted by the remaining provisions of this Section 4.1(a) (including Section 4.1(a) of current officers, key employees and key consultants and maintain satisfactory relationships with customers, suppliers and distributors, Governmental Entities and other Persons with whom the Company Disclosure Schedule) will not constitute a violation of or any Company Subsidiary has material business relations. Without limiting the foregoing. During , during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent Parent shall otherwise give its prior consent in writing (in the case of subsections (iv)writing, (vi), (viii), (ix), (x), (xii), (xiii), and (xvii) of this Section 4.1(a), such consent not to be unreasonably withheld, conditioned or delayed), (B2) as set forth in Section Part 4.1(a) of the Company Disclosure Schedule, (C3) as may be required by applicable Legal Requirements, Requirements or (D4) as expressly permitted or required by this Agreement, the Company shall not (and shall not permit any Company Subsidiary to):
(i) amend the Company’s Organizational Documents or amend the Organizational Documents of any Company Subsidiarythe Company;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of the Company’s capital stock or other equity interests of the Company or any Company Subsidiary;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of the Company’s capital stock or the capital stock or other equity interest of any Company Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Company Subsidiary to the Company or another wholly owned Company SubsidiarySubsidiary of the Company;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents)Person, (C) any business or division of another Personowned by a third party, or (D) any material assets in a single transaction or series of related transactions for an aggregate purchase price in excess of $250,000, except, (1) acquisitions by the Company from any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries; Subsidiaries of the Company, (2) the purchase of equipment, supplies and inventory in the ordinary course of business or (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of business; provided that the issuance of any Insurance Contract by any Company Insurance Subsidiary will not be considered the acquisition of a business for purposes of this Section 4.1;
1 Note to W&S: Subject to ongoing review by the Company.
(v) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, issue, sell, grant or otherwise permit to become outstanding any additional shares of, or securities convertible or exchangeable for, or options, warrants or rights to acquire, any shares of its capital stock or other equity interests, other than (A) shares of Company Common Stock issuable upon exercise of Company Options or the vesting or settlement of Company RSUs, in each case outstanding as of the date of this Agreement and in accordance with the terms of the applicable award; (B) pursuant to the Company OptionsESPP in the ordinary course of business and in accordance with the terms thereof and of this Agreement (including Section 4.8 hereof); (C) in connection with the exercise of Company Warrants; and (D) the issuance of the Additional Shares pursuant to Section 2.17 of the INSU Merger Agreement;
(vi) except in connection with any transaction between the Company and any wholly owned Company Subsidiary or among any wholly owned Company Subsidiaries, sell, assign, transfer, lease or license to any third party, or incur any Lien on any of its material tangible property or tangible assets, except for Company Permitted Encumbrancesencumber, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), any material Company IP or material tangible assets of the Company, other than: than (A) sales of inventory, goods or services in the ordinary course of business in a manner consistent with past practice or of obsolete equipment or assets in the ordinary course of business consistent with past practicebusiness; (B) pursuant to written Contracts or commitments existing as of the date of this AgreementAgreement and set forth in Part 4.1(a)(vi) of the Company Disclosure Schedule; or (C) as security for any borrowings permitted by Section 4.1(a)(viii4(a)(viii); or (D) licenses granted to customers or other third parties in the ordinary course of business, including any licenses granted in the operation of the enterprise business in a manner consistent with past practicesolutions line of the Company (the “EBS Business”);
(vii) directly or indirectly repurchase, redeem or otherwise acquire any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, or any other securities or obligations convertible (currently or after the passage of time or the occurrence of certain events) into or exchangeable for any shares of the Company’s or any Company Subsidiary’s capital stock or equity interests, except: except (A) shares of Company Common Stock repurchased from employees or consultants or former employees or consultants of the Company pursuant to the exercise of repurchase rights binding on the Company and existing prior to the date of this Agreement; or (B) shares of Company Common Stock accepted as payment for the exercise price of options to purchase Company Options Common Stock pursuant to the Company Equity Plans or for withholding Taxes incurred in connection with the exercise, vesting or settlement of Company OptionsOptions and Company RSUs, as applicable, in accordance with the terms of the applicable awardaward and (C) in connection with the exercise of Company Warrants;
(viii) incur (other than draws on existing revolving loans)A) incur, redeem, repurchase, prepay (other than prepayments of revolving loans)prepay, defease, or cancel any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or rights to acquire any debt securities (directly, contingently or otherwise) or make any loans or advances or capital contributions to any other Person, other than in the ordinary course of business or (B) incur any Lien on any of its material property or assets, except for any indebtedness among the Company and its wholly owned Company Subsidiaries or among any wholly owned Company Subsidiaries (and guarantees by the Company or the Company Subsidiaries in respect thereof)Permitted Encumbrances;
(ix) (A) adopt, terminate or amend in any material respect any Company Plan except to the extent permitted by clauses (B), (C), (D) or (E) of this Section 4.1(a)(ix)Plan, (B) increase, or accelerate the vesting or payment of, the compensation or benefits of any member of the Company Boarddirector, individual independent contractor or current employee, or former employee of the Company or any Company SubsidiarySubsidiary with an annual compensation of $200,000 or above, other than as contemplated by Part 4.1(a)(ix) of the Company Disclosure Schedule, (C) grant any rights to severance, retention, change in control control, transaction or termination pay to any member of the Company Boardcurrent or former director, independent contractor or current employee or former employee of the Company or any Company SubsidiarySubsidiary with an annual compensation of $200,000 or above, (D) hire or promote any employee at or to the level with an annual compensation of Vice President $200,000 or above, or (E) terminate the employment of any employee of the Company or any Company Subsidiary whose with an annual base salary exceeds compensation of $100,000 200,000 or above (other than for cause); except, in each case, for: for (1) amendments to Company Plans determined by the Company in good faith to be required to comply with applicable Legal Requirements; , (2) hiring as otherwise expressly contemplated by this Agreement, (3) with respect to the annual renewal process for any Person for employment Company Plan that is not reasonably expected to result in a material cost increase to the Company or any Company Subsidiary, (including by means 4) in connection with any employee hire (i) to replace departing employees with an annual compensation of internal promotionless than $200,000, (ii) to fill any currently existing Vice President open positions as set forth on Part 4.1(a)(ix)(4)(ii) of the Company Disclosure Schedule, (iii) who has already accepted an offer of employment and is set forth on Part 4.1(a)(ix)(4)(iii) of the Company Disclosure Schedule or higher position that becomes vacant after (iv) otherwise in the date ordinary course of this Agreement, and, notwithstanding anything to the contrary business; or (5) for increases in this Section 4.1(a)(ix), provide such Person with compensation and or benefits for such position consistent with past practice; (3) hiring any Person for employment in accordance with the Company’s present hiring plan made available to Parent or otherwise hiring an individual below the level of Vice President in the ordinary course of business in a manner consistent for any employee with past practice; (4) increases in an annual compensation or benefits required pursuant to any Company Plan in effect on the date hereof; (5) increases to total target cash opportunities (i.e., annual base salary or wage rates and target annual cash bonus opportunities) in amounts that are in the ordinary course of business in a manner consistent with past practice; and (6) any other actions set forth in Section 4.1(a)(ix) of the Company Disclosure Scheduleless than $200,000;
(x) except in the ordinary course of business, (i)(A) amend or terminate (except for terminations pursuant to the expiration of the existing term of any Material ContractContract and amendments in the ordinary course of business and except with respect to Reinsurance Agreements) any Material Contract or (B) waive, release or assign any material rights under any Material ContractsContracts (other than any Reinsurance Agreement), or (ii) enter into or renew any Contract or agreement that, if in effect on the date of this Agreement, would constitute a Material ContractContract (except for renewals of any existing Material Contract in the ordinary course of business and Contracts entered into or renewed in connection with the EBS Business and except for Reinsurance Agreements), or (iii) enter into any Reinsurance Agreement that does not meet the criteria set forth on Part 4.1(a)(ix)(iii) of the Company Disclosure Schedule;
(xi) change any of its methods of financial accounting or accounting practices in any material respect other than as required by changes in GAAPGAAP or SAP or as required by applicable Legal Requirements;
(xii) make (except for elections made in the ordinary course of business)make, change or revoke any material Tax election, change or adopt any Tax accounting period or material method of Tax accounting, amend any material Tax Company Return if such amendment would reasonably be expected to result in a material Tax liability, file any material Company Return prepared in a manner materially inconsistent with past practice, settle or compromise any material liability for Taxes or any Tax audit, claim, or other proceeding relating to a material amount of Taxes, enter into any agreement with a Governmental Entity relating to Taxes “closing agreement” within the meaning of Section 7121 of the Code (or any similar state, local or non-U.S. Legal Requirement) if such agreement would reasonably be expected to result in a material Tax liabilityliability or have a material impact on Taxes, request any Tax ruling from any Governmental Entity, surrender any right to claim a material refund of Taxes, or, other than in the ordinary course of business, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xiii) sell, transfer, assign, license, or otherwise dispose of (by merger, consolidation, operation of law, division or otherwise), or mortgage, encumber or exchange any material Intellectual Property owned, or purported to be owned, by the Company or any Subsidiary of the Company, including, for the avoidance of doubt, any sale, transfer, assignment, license, or other disposition of, or mortgage, encumbrance or exchange of any such material Intellectual Property to or with any Affiliate of the Company (other than consignment of Company Products non-exclusive licenses granted in the ordinary course of business) or modify, amend, cancel, terminate, waive, release or assign any Company IP License or any rights, claims, obligations or benefits thereunder or enter into any Contract that would have been a Company IP License had it been entered into prior to the First Effective Time, in each case, with respect to any nonmaterial Company IP License, except, in each case, in the ordinary course of business and for licenses granted in the connection with the EBS Business;
(xiv) (i) make any capital expenditure that is not contemplated by the capital expenditure budget (the “CapEx Budget”) set forth in Part Section 4.1(a)(xiii4(a)(xiv)(i) of the Company Disclosure Schedule or (a “Non-Budgeted Capital Expenditure”)ii) incur any cash expenditures or obligations or liabilities except cash expenditures, except that the Company obligations or any Company Subsidiary may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement would not, in the aggregate, exceed the aggregate CapEx Budget by more than $100,000;
(xiv) except as expressly required by applicable Legal Requirements or the Company’s Organizational Documents, convene liabilities incurred (A) any special meeting in the ordinary course of the Company’s shareholders other than the Company Shareholder Meeting business or (B) any other meeting of the Company’s shareholders to consider a proposal that would reasonably be expected to impair, prevent or delay the consummation of in connection with the transactions contemplated herebyby this Agreement;
(xv) enter into any agreement, understanding or arrangement with respect to the voting of any capital stock or other equity interests of the Company (including any voting trust), other than with respect to awards under the Company Equity Plans otherwise permitted under this Agreement or in connection with the granting of revocable proxies in connection with any meeting of the Company’s shareholdersstockholders;
(xvi) adopt a plan of (A) complete or partial liquidation of the Company or any Subsidiary of the Company Subsidiary or (B) dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization, other than, in the case of clause (B), transactions between or among direct or indirect wholly owned Company Subsidiaries;
(xvii) commence, settle or compromise any litigation, claim, suit, action or proceeding, except for (x) ordinary course claims and related Legal Proceedings under or with respect to any Insurance Contract and (y) other settlements or compromises other than that (A) the paymentinvolve solely monetary remedies with a value not in excess of $75,000, discharge with respect to any individual litigation, claim, suit, action or satisfactionmatter, or $250,000 in the ordinary course of business in a manner consistent with past practiceaggregate to be paid by the Company and its Subsidiaries, of liabilities reflected or reserved against in the Most Recent Company Balance Sheet, or (B) those that do not (x) impose any injunctive relief restriction on the Company’s business or the business of the Company or any Company Subsidiary (other than confidentiality obligations)Subsidiaries, (yC) involve do not relate to any litigation, claim, suit, action or proceeding by the payment of money greater than $100,000 Company’s stockholders in excess of existing insurance coverage, connection with this Agreement or the Mergers and (zD) do not include an admission of liability or fault on the part of the Company or any Company Subsidiary;
(xviii) materially reduce the amount of insurance coverage under the material commercial insurance policies of the Company and the Company Subsidiaries or fail to use reasonable best efforts to renew or maintain any such material existing insurance policies;
(xix) (A) amend any material Company Permits in a manner that adversely impacts the Company’s ability to conduct its business in any material respect or (B) terminate or allow to lapse any material Company Permits;
(xx) (A) fail to pay any issuance, renewal, maintenance and other payments that become due with respect to any material Company Registered IP or otherwise abandon, cancel, or permit to lapse any material Company Registered IP, other than in its reasonable business judgment or in the ordinary course of business in a manner consistent with past practicebusiness, or (B) authorize the disclosure to any third party of any material Trade Secret included in the Company IP in a way that results in loss of trade secret protection, other than in the ordinary course of business in a manner consistent with past practicebusiness;
(xxi) take except in the ordinary course of business and for Contracts entered into in connection with the EBS Business, enter into any individual Contract under which the Company or cause any Company Subsidiary (A) grants or agrees to be taken grant any actionright to material Company IP, other than non-exclusive licenses, or knowingly fail (B) agrees to take pay any royalties in excess of $150,000 with respect to any Intellectual Property;
(xxii) except as expressly required by applicable Legal Requirements or cause the Company’s Organizational Documents, convene (A) any special meeting of the Company’s stockholders other than the Company Stockholder Meeting or (B) any other meeting of the Company’s stockholders to be taken any action, which action or failure to act consider a proposal that would reasonably be expected to (A) impair, prevent or delay the Merger from qualifying as a reorganization within the meaning of Section 368(a) consummation of the Code transactions contemplated hereby;
(xxiii) enter into any new line of business;
(xxiv) (i) alter or amend in any existing financial, underwriting, claims, claims handling, risk retention, reserving, investment or actuarial practice, guideline or policy or any material assumption underlying an actuarial practice or policy, except as may be required by GAAP, SAP, any Governmental Entity or applicable law or (Bii) result enter into any Contract or commitment with any insurance regulatory authority, in any the case of each of clauses (i) and (ii) other than in the conditions to the Mergers set forth in ARTICLE V not being satisfiedordinary course of business; or
(xxiixxv) authorize, approve or enter into any agreement or make any commitment to take any of the actions described in clauses “(i) )” through “(xxi) xxiv)” of this Section 4.1(a)sentence.
(b) Parent agrees that, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (1) to the extent the Company shall otherwise give its prior consent in writing (such consent not to be withheld, conditioned or delayed)writing, (2) as set forth in Section Part 4.1(b) of the Parent Disclosure Schedule, (3) as may be required by applicable Legal Requirements, Requirements or (4) as expressly permitted or required by this Agreement, Parent shall, and shall cause the Parent Subsidiaries to, use commercially reasonable efforts to conduct its business in the ordinary course of businessin all material respects and use reasonable best efforts to maintain and preserve intact its business organization. Parent agrees thatWithout limiting the foregoing, during the period from the date of this Agreement through the earlier of the Closing or the termination of this Agreement, except (A1) to the extent the Company shall otherwise give its prior consent in writing, (B) as set forth in Section 4.1(b) of the Parent Disclosure Schedule, (C) as may be required by applicable Legal Requirements, or (D) as expressly permitted or required by this Agreement, Parent shall not (and shall not permit any Parent Subsidiary to):
(i) amend Parent’s or either of the Acquisition Subs’ Organizational Documents or amend the Organizational Documents of any Parent Subsidiary in any manner that would be adverse in any material respect to the holders of Company Common Stock (after giving effect to the Mergers) or materially delay or materially impair the ability of Parent to consummate the Mergers;
(ii) split, combine, subdivide, change, exchange, amend the terms of or reclassify any shares of Parent’s capital stock or other equity interests of the Company, except for any such transaction involving only wholly owned Parent Subsidiaries;
(iii) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock or property) with respect to any shares of Parent’s capital stock or the capital stock or other equity interest of any Parent Subsidiary, other than dividends or distributions only to the extent paid by any wholly owned Parent Subsidiary to Parent or another wholly owned Parent Subsidiary;
(iv) acquire (by merger, consolidation, operation of law, acquisition of stock, other equity interests or assets, formation of a joint venture or otherwise) (A) any other Person, (B) any equity interest in any other Person (other than investments in equity securities that constitute short term investments that are accounted for as cash equivalents), (C) any business or division of another Person, or (D) any assets material to the Company and the Company Subsidiaries, taken as a whole, except in each case, (1) acquisitions by Parent from any wholly owned Parent Subsidiary or among any wholly owned Parent Subsidiaries; (2) the purchase of equipment, supplies and inventory in the ordinary course of business; (3) inbound licenses or other grants or assignments of Intellectual Property in the ordinary course of businesswrit
Appears in 1 contract
Sources: Merger Agreement (Metromile, Inc.)