Pre-Closing Obligations. (a) From the date of this Agreement until the Closing, except (i) as permitted by this Agreement, (ii) as required by Applicable Law, Permit or any Governmental Authority, (iii) as set forth in Section 6.01 of the Disclosure Schedule or (iv) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), the Company shall, and shall cause the other Acquired Entities to, (A) conduct their businesses in the ordinary course of business and (B) use commercially reasonable efforts to continue with (1) the engineering, design and construction of the ▇▇▇▇▇▇▇▇ Facility and (2) bringing the ▇▇▇▇▇▇▇▇ Facility into commercial operations; provided that (x) no action by any Acquired Entity that is expressly permitted by an exception to a subclause of Section 6.01(b) will be deemed a breach of this Section 6.01(a) and (y) any Acquired Entity’s failure to take any action prohibited by Section 6.01(b) will not be a breach of this Section 6.01(a); provided, further, that (i) the Company shall be entitled, in its reasonable judgment, to determine the amount and timing of any Indebtedness incurred or expenditures made in connection with the foregoing clause (B) (subject to the Company’s compliance with Section 6.01(b)(xviii)) and (ii) in no event shall any Acquired Entity be deemed to be in breach of the foregoing clause (B) to the extent such breach results from Buyer’s refusal to provide its consent in connection with the incurrence of Indebtedness pursuant to Section 6.01(b)(xviii). (b) Without limiting the generality of the foregoing, from the date hereof until the Closing, except (w) as permitted by this Agreement, (x) as required by Applicable Law, Permit or any Governmental Authority, (y) as set forth in Section 6.01 of the Disclosure Schedule or (z) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed, except in the case of Section 6.01(b)(xxiii), with respect to which Buyer may withhold, condition or delay its consent in its sole discretion), the Company shall not, and shall cause the other Acquired Entities not to: (i) (A) amend or modify (whether by merger, consolidation or otherwise) the Organizational Documents of any Acquired Entity or (B) consent to or execute and deliver any amendment or modification to the Organizational Documents of any JV Entity or take any action with respect to any JV Entity, in each case, in any manner adverse to Buyer or any Acquired Entity; (ii) (A) split, combine, reclassify or amend the terms of any Shares or (B) declare, set aside or pay any dividend or other distribution, other than, in the case of this clause (B), (x) cash dividends or other cash distributions by the Company to any Seller, or (y) cash distributions or other cash payments to facilitate the settlement or elimination of intercompany accounts between any Acquired Entity, on the one hand, and any Seller and any of their respective Affiliates, on the other, in each case under (x) and (y) above, solely to the extent paid prior to the Measurement Time and would not be reasonably likely to result in any Liability (including any Tax) of an Acquired Entity following the Closing (other than any Liability included in Closing Indebtedness or Closing Net Working Capital, as applicable); (iii) enter into any Contract related to the voting of its capital stock or Equity Interests; (iv) (A) issue, sell, grant, dispose of, transfer or encumber any Equity Interests of any Acquired Entity or (B) merge or consolidate with any other Person; (v) acquire (whether by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material assets (including Equity Interests in another Person) or Real Property, other than (A) as required pursuant to existing Contracts made available to Buyer; provided that no Acquired Entity shall exercise any option or purchase right to acquire Real Property, or (B) inventory, supplies, vehicles or equipment in the ordinary course of business; (vi) dispose of (whether by merger, consolidation, disposition of stock or assets or otherwise), directly or indirectly, any material assets or Real Property, other than (A) pursuant to existing Contracts made available to Buyer or (B) sales of inventory in the ordinary course of business; (vii) make any loans, advances or capital contributions to, or investments in, any other Person (including the JV Entities), other than (A) in the ordinary course of business or (B) loans, advances or capital contributions to, or investments in, the Acquired Entities; (viii) other than as required by the terms of any Company Benefit Plan or Applicable Law, (A) with respect to any Company Employee, current or former employee, officer, director or other natural person service provider, (1) grant or increase any severance or termination entitlement to such individual (or amend any existing severance or termination pay arrangement) (other than severance granted in the ordinary course of business and relating to the settlement of any dispute in connection with the termination of the applicable Company Employee) or (2) enter into any employment, deferred compensation or other similar agreement with such individual (or amend any existing agreement), (B) increase compensation or other benefits payable to any Company Employee, current or former employee, officer, director or other natural person service provider, except increases to annual base salary with respect to any individual of not more than 8% of annual base salary in the ordinary course of business and consistent with past practice; provided that Buyer shall be deemed to have provided its consent to such increase if it does not respond to the Company within 10 Business Days of such written request, (C) increase bonuses payable to any Company Employee in a manner which is inconsistent with the current structure upon which bonuses are paid pursuant to the bonus structures set forth in Section 6.01(b)(viii) of the Disclosure Schedule, (D) establish, adopt, enter into, amend, modify or terminate any Company Benefit Plan, other than in connection with (x) 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 or (y) the issuance of offer letter agreements to those individuals hired on or following the date hereof and not in contravention of this Agreement where such offer letter agreements provide for “at-will” employment and do not provide for any severance entitlements or (E) accelerate the vesting, lapsing of restrictions, or payment or fund or secure the payment in any way of any compensation or benefits with respect to any Company Employee or current or former employee, officer, director or natural person service provider of the Company or any Company Subsidiary; (ix) other than as required by Applicable Law, (A) establish, enter into, adopt, renew, extend, or materially amend any Collective Bargaining Agreement or (B) recognize or certify any labor union, labor organization, works council, or group of Company Employees as the bargaining representative for any Company Employees; (x) hire or engage any person to be a Company Employee or service provider to an Acquired Entity, other than the hiring or engagement of employees or service providers (A) with annual base compensation not in excess of $300,000 or (B) with a title of VP or below (provided that the Acquired Entities shall determine the title of any such person in the ordinary course of business consistent with past practice); (xi) terminate the employment of any current Company Employee (A) with annual base compensation in excess of $200,000 other than for cause (as determined in accordance with past practice) or (B) with a title of VP or above; (xii) (A) waive, release or amend the restrictive covenant obligations of any current or former Company Employee, independent contractor, officer or director of the Acquired Entities or (B) fail to send a written communication relating to any breach of a restrictive covenant by any current or former Company Employee, independent contractor, officer or director of the Acquired Entities; provided that, if necessary in the reasonable judgment of the Company, the Company shall cause the Acquired Entities to enforce restrictive covenant obligations of any current or former Company Employee with a title of VP or above, officer or director of the Acquired Entities; (xiii) (A) materially amend or voluntarily terminate any Material Contract, (B) other than, with respect to Material Contracts contemplated by Sections 3.09(a)(x), 3.09(a)(xi), 3.09(a)(xiii), 3.09(a)(xix) or 3.09(a)(xxi) or Contracts that would not reasonably be expected to involve payments by any Acquired Entity in excess of $1,000,000, in the ordinary course of business consistent with past practice, enter into any Material Contract, (C) waive, release or assign any material rights, claims or causes of actions under any Material Contract or (D) enter into, amend or modify any Related Party Transaction; (xiv) except as required by Applicable Law, (A) make any material Tax election inconsistent with past practice, (B) change or revoke any material Tax election, (C) change any method of Tax accounting or annual Tax accounting period, (D) surrender or compromise any right to claim a material Tax refund, (E) amend any material Tax Returns, (F) prepare or file any material Tax Returns in a manner materially inconsistent with past practice, (G) settle or compromise any Tax Claim or enter into any closing agreement in respect of any material Tax, (H) file any ruling request or application for Tax benefits with any Taxing Authority, (I) enter into or amend any Tax Sharing Agreement, (J) extend or waive the statute of limitations period applicable to any Tax or Tax Return or (K) take or permit any other Person to take any action that would reasonably be expected to result in a change of any Acquired Entity’s Tax classification; (xv) assign, transfer, lease, license (except for non-exclusive licenses granted in the ordinary course of business consistent with past practice), allow to lapse, cancel, abandon or otherwise dispose of or encumber any material Intellectual Property Rights (or disclose to any third party other than to Buyer or its Representatives, or any third-party service providers of the Acquired Entities in the ordinary course of business in connection with obtaining services from such third party, and subject to customary confidentiality obligations, any material Trade Secrets) owned, licensed, used or held for use by any Acquired Entity; (xvi) make any change to the Company’s methods of financial accounting, except as required by changes in GAAP or other Applicable Law; (xvii) adopt a plan or agreement of complete or partial liquidation or dissolution or restructure or reorganize; (xviii) incur or guaranty any Indebtedness in excess of $1,000,000, other than (A) pursuant to the existing Second Amended and Restated Loan and Security Agreement, dated as of January 13, 2022, by and between the Company and ▇▇▇▇▇ Fargo Bank, National Association, as amended, in the ordinary course of business or for any Permitted Construction Loan and (B) if the Closing has not occurred within six months of the date hereof, loans, on commercially reasonable terms, for the purpose of funding construction of the new facilities listed in Section 6.01(b)(xviii) of the Disclosure Schedule in an amount for each such facility not to exceed, in the aggregate, the amount listed opposite such facility in Section 6.01(b)(xviii) of the Disclosure Schedule; provided that (x) the consummation of the transactions contemplated hereby or by the other Transactions Agreements will not breach, result in the loss of any benefit under, be a default (or an event that, with or without notice or lapse of time, or both, would be a default) under, result in the termination, cancelation or amendment of or a right of termination, cancelation, consent or amendment under, accelerate the performance required by, or result in the creation of any Lien on any of the assets of the Acquired Entities (other than as set forth in clause (y) below) under, any Contract entered into in connection with any Indebtedness incurred pursuant to the foregoing clause (B) and (y) no Acquired Entity will grant any Lien on any of its assets in connection with any Indebtedness incurred pursuant to the foregoing clause (B) other than a Lien on the facility (and ancillary assets directly related to such facility) with respect to which the Indebtedness incurred pursuant to the foregoing clause (B) is obtained; provided, further, that, in the event the Company seeks the prior written consent of Buyer in connection with this Section 6.01(b)(xviii), Buyer shall be deemed to have provided its consent if it does not respond to the Company within 10 Business Days of such written request; (xix) repurchase, redeem or otherwise acquire any Equity Interests of any Acquired Entity; (xx) (A) waive, release or assign any material right or Claim of any Acquired Entity or (B) settle or compromise any Claim against any Acquired Entity (1) where the settlement or compromise involves injunctive or other equitable relief against any Acquired Entity (other than customary confidentiality obligations) or involves any material Intellectual Property Rights or (2) if such settlement or compromise would result in such Acquired Entity paying after the Closing an amount (excluding any deductibles under insurance policies) more than $1,000,000 in excess of the proceeds to be received, if any, from any insurance policies or any third-party indemnitor in connection with such settlement or compromise; (xxi) (A) fund any capital expenditure in any calendar year in a manner not reflected in the Capital Expenditure Budget, in each case, including by reallocating the amount of any proposed capital expenditure to any other category, line item or time period included in the Capital Expenditure Budget, other than a (1) negative 5% variance or any positive variance in the capital expenditure amount allocated to any specified line item in the Capital Expenditure Budget for maintenance capital expenditures or (2) 20% variance in the capital expenditure amount allocated to any specified line item in the Capital Expenditure Budget for construction capital expenditures (in each case, as compared to the anticipated capital expenditure amount allocated to such line item in the Capital Expenditure Budget for any calendar year) or (B) fail to make any capital expenditure as set forth in the Capital Expenditure Budget consistent in all material respects with the Capital Expenditure Budget (it being agreed that the timing of any capital expenditure within the time period applicable to such expenditure in the Capital Expenditure Budget shall be determined solely by the Company in its reasonable discretion); provided that in no event shall any Acquired Entity be deemed to be in breach of this Section 6.01(b)(xxi) to the extent such breach results from Buyer’s refusal to provide its consent in connection with the incurrence of Indebtedness pursuant to Section 6.01(b)(xviii); (xxii) subject any of its assets to any Lien, except for a Permitted Lien; (xxiii) offer or provide to any customer any incentive or other consideration in connection with such customer’s waiver of any customer accommodation or goodwill credits; or (xxiv) agree or commit to do any of the foregoing.
Appears in 1 contract
Sources: Stock Purchase Agreement (Performance Food Group Co)
Pre-Closing Obligations. (a) From the date of this Agreement until the ClosingClosing Date, except (i) as permitted by this Agreement, (ii) as required by Applicable Law, Permit authorization, Permit, license or any Governmental Authority, (iii) as set forth in Section 6.01 of the Disclosure Schedule or (iv) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), the Company shall, and Companies shall cause the other Acquired Entities to, (A) conduct their businesses in the ordinary course of business and (B) use commercially reasonable efforts to continue with (1) the engineeringcourse; provided, design and construction of the ▇▇▇▇▇▇▇▇ Facility and (2) bringing the ▇▇▇▇▇▇▇▇ Facility into commercial operations; provided that (x) no action by any Acquired Entity that is the Companies with respect to matters expressly permitted by an exception to a subclause of Section 6.01(b) will be deemed a breach of this Section 6.01(a) ), and (y) any Acquired Entity’s the Companies’ failure to take any action prohibited by Section 6.01(b) will not be a breach of this Section 6.01(a); provided, further, that (i) the Company shall be entitled, in its reasonable judgment, to determine the amount and timing of any Indebtedness incurred or expenditures made in connection with the foregoing clause (B) (subject to the Company’s compliance with Section 6.01(b)(xviii)) and (ii) in no event shall any Acquired Entity be deemed to be in breach of the foregoing clause (B) to the extent such breach results from Buyer’s refusal to provide its consent in connection with the incurrence of Indebtedness pursuant to Section 6.01(b)(xviii).
(b) Without limiting the generality of the foregoing, from the date hereof until the ClosingClosing Date, except (wi) as permitted by this Agreement, (xii) as required by Applicable Law, Permit authorization, Permit, license or any Governmental Authority, (yiii) as set forth in Section 6.01 of the Disclosure Schedule or (ziv) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), except in the case of Section 6.01(b)(xxiii)Companies shall not and, with respect to which Buyer may withhold, condition or delay its consent in its sole discretionSection 6.01(b)(vii) and Section 6.01(b)(viii), the Company Seller and its Affiliates shall not, and shall cause the other Acquired Entities not to:
(i) (A) amend or modify (whether by merger, consolidation or otherwise) the Organizational Documents of any Acquired Entity or (B) consent to or execute and deliver any amendment or modification to the Organizational Documents of any JV Entity or take any action with respect to any JV Entity, in each case, in any manner adverse to Buyer or any Acquired Entity;
(ii) (A) split, combine, reclassify or amend the terms of any Shares or (B) declare, set aside or pay any dividend or other distribution, other than, in the case of this clause (B), (x) cash dividends or other cash distributions by the Company to any Seller, or (y) cash distributions or other cash payments to facilitate the settlement or elimination of intercompany accounts between any Acquired Entity, on the one hand, and any Seller and any of their respective Affiliates, on the other, in each case under (x) and (y) above, solely to the extent paid prior to the Measurement Time and would not be reasonably likely to result in any Liability (including any Tax) of an Acquired Entity following the Closing (other than any Liability included in Closing Indebtedness or Closing Net Working Capital, as applicable);
(iii) enter into any Contract related to the voting of its capital stock or Equity Interests;
(iv) (A) issue, sell, grant, dispose of, transfer or encumber any Equity Interests of any Acquired Entity or (B) merge or consolidate with any other Person;
(v) acquire (whether by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material assets (including Equity Interests in another Person) or Real Property, other than (A) as required pursuant to existing Contracts made available to Buyer; provided that no Acquired Entity shall exercise any option or purchase right to acquire Real Property, or (B) inventory, supplies, vehicles or equipment in the ordinary course of business;
(vi) dispose of (whether by merger, consolidation, disposition of stock or assets or otherwise), directly or indirectly, any material assets or Real Property, other than (A) pursuant to existing Contracts made available to Buyer or (B) sales of inventory in the ordinary course of business;
(vii) make any loans, advances or capital contributions to, or investments in, any other Person (including the JV Entities), other than (A) in the ordinary course of business or (B) loans, advances or capital contributions to, or investments in, the Acquired Entities;
(viii) other than as required by the terms of any Company Benefit Plan or Applicable Law, (A) with respect to any Company Employee, current or former employee, officer, director or other natural person service provider, (1) grant or increase any severance or termination entitlement to such individual (or amend any existing severance or termination pay arrangement) (other than severance granted in the ordinary course of business and relating to the settlement of any dispute in connection with the termination of the applicable Company Employee) or (2) enter into any employment, deferred compensation or other similar agreement with such individual (or amend any existing agreement), (B) increase compensation or other benefits payable to any Company Employee, current or former employee, officer, director or other natural person service provider, except increases to annual base salary with respect to any individual of not more than 8% of annual base salary in the ordinary course of business and consistent with past practice; provided that Buyer shall be deemed to have provided its consent to such increase if it does not respond to the Company within 10 Business Days of such written request, (C) increase bonuses payable to any Company Employee in a manner which is inconsistent with the current structure upon which bonuses are paid pursuant to the bonus structures set forth in Section 6.01(b)(viii) of the Disclosure Schedule, (D) establish, adopt, enter into, amend, modify or terminate any Company Benefit Plan, other than in connection with (x) 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 or (y) the issuance of offer letter agreements to those individuals hired on or following the date hereof and not in contravention of this Agreement where such offer letter agreements provide for “at-will” employment and do not provide for any severance entitlements or (E) accelerate the vesting, lapsing of restrictions, or payment or fund or secure the payment in any way of any compensation or benefits with respect to any Company Employee or current or former employee, officer, director or natural person service provider of the Company or any Company Subsidiary;
(ix) other than as required by Applicable Law, (A) establish, enter into, adopt, renew, extend, or materially amend any Collective Bargaining Agreement or (B) recognize or certify any labor union, labor organization, works council, or group of Company Employees as the bargaining representative for any Company Employees;
(x) hire or engage any person to be a Company Employee or service provider to an Acquired Entity, other than the hiring or engagement of employees or service providers (A) with annual base compensation not in excess of $300,000 or (B) with a title of VP or below (provided that the Acquired Entities shall determine the title of any such person in the ordinary course of business consistent with past practice);
(xi) terminate the employment of any current Company Employee (A) with annual base compensation in excess of $200,000 other than for cause (as determined in accordance with past practice) or (B) with a title of VP or above;
(xii) (A) waive, release or amend the restrictive covenant obligations of any current or former Company Employee, independent contractor, officer or director of the Acquired Entities or (B) fail to send a written communication relating to any breach of a restrictive covenant by any current or former Company Employee, independent contractor, officer or director of the Acquired Entities; provided that, if necessary in the reasonable judgment of the Company, the Company shall cause the Acquired Entities to enforce restrictive covenant obligations of any current or former Company Employee with a title of VP or above, officer or director of the Acquired Entities;
(xiii) (A) materially amend or voluntarily terminate any Material Contract, (B) other than, with respect to Material Contracts contemplated by Sections 3.09(a)(x), 3.09(a)(xi), 3.09(a)(xiii), 3.09(a)(xix) or 3.09(a)(xxi) or Contracts that would not reasonably be expected to involve payments by any Acquired Entity in excess of $1,000,000, in the ordinary course of business consistent with past practice, enter into any Material Contract, (C) waive, release or assign any material rights, claims or causes of actions under any Material Contract or (D) enter into, amend or modify any Related Party Transaction;
(xiv) except as required by Applicable Law, (A) make any material Tax election inconsistent with past practice, (B) change or revoke any material Tax election, (C) change any method of Tax accounting or annual Tax accounting period, (D) surrender or compromise any right to claim a material Tax refund, (E) amend any material Tax Returns, (F) prepare or file any material Tax Returns in a manner materially inconsistent with past practice, (G) settle or compromise any Tax Claim or enter into any closing agreement in respect of any material Tax, (H) file any ruling request or application for Tax benefits with any Taxing Authority, (I) enter into or amend any Tax Sharing Agreement, (J) extend or waive the statute of limitations period applicable to any Tax or Tax Return or (K) take or permit any other Person to take any action that would reasonably be expected to result in a change of any Acquired Entity’s Tax classification;
(xv) assign, transfer, lease, license (except for non-exclusive licenses granted in the ordinary course of business consistent with past practice), allow to lapse, cancel, abandon or otherwise dispose of or encumber any material Intellectual Property Rights (or disclose to any third party other than to Buyer or its Representatives, or any third-party service providers of the Acquired Entities in the ordinary course of business in connection with obtaining services from such third party, and subject to customary confidentiality obligations, any material Trade Secrets) owned, licensed, used or held for use by any Acquired Entity;
(xvi) make any change to the Company’s methods of financial accounting, except as required by changes in GAAP or other Applicable Law;
(xvii) adopt a plan or agreement of complete or partial liquidation or dissolution or restructure or reorganize;
(xviii) incur or guaranty any Indebtedness in excess of $1,000,000, other than (A) pursuant to the existing Second Amended and Restated Loan and Security Agreement, dated as of January 13, 2022, by and between the Company and ▇▇▇▇▇ Fargo Bank, National Association, as amended, in the ordinary course of business or for any Permitted Construction Loan and (B) if the Closing has not occurred within six months of the date hereof, loans, on commercially reasonable terms, for the purpose of funding construction of the new facilities listed in Section 6.01(b)(xviii) of the Disclosure Schedule in an amount for each such facility not to exceed, in the aggregate, the amount listed opposite such facility in Section 6.01(b)(xviii) of the Disclosure Schedule; provided that (x) the consummation of the transactions contemplated hereby or by the other Transactions Agreements will not breach, result in the loss of any benefit under, be a default (or an event that, with or without notice or lapse of time, or both, would be a default) under, result in the termination, cancelation or amendment of or a right of termination, cancelation, consent or amendment under, accelerate the performance required by, or result in the creation of any Lien on any of the assets of the Acquired Entities (other than as set forth in clause (y) below) under, any Contract entered into in connection with any Indebtedness incurred pursuant to the foregoing clause (B) and (y) no Acquired Entity will grant any Lien on any of its assets in connection with any Indebtedness incurred pursuant to the foregoing clause (B) other than a Lien on the facility (and ancillary assets directly related to such facility) with respect to which the Indebtedness incurred pursuant to the foregoing clause (B) is obtained; provided, further, that, in the event the Company seeks the prior written consent of Buyer in connection with this Section 6.01(b)(xviii), Buyer shall be deemed to have provided its consent if it does not respond to the Company within 10 Business Days of such written request;
(xix) repurchase, redeem or otherwise acquire any Equity Interests of any Acquired Entity;
(xx) (A) waive, release or assign any material right or Claim of any Acquired Entity or (B) settle or compromise any Claim against any Acquired Entity (1) where the settlement or compromise involves injunctive or other equitable relief against any Acquired Entity (other than customary confidentiality obligations) or involves any material Intellectual Property Rights or (2) if such settlement or compromise would result in such Acquired Entity paying after the Closing an amount (excluding any deductibles under insurance policies) more than $1,000,000 in excess of the proceeds to be received, if any, from any insurance policies or any third-party indemnitor in connection with such settlement or compromise;
(xxi) (A) fund any capital expenditure in any calendar year in a manner not reflected in the Capital Expenditure Budget, in each case, including by reallocating the amount of any proposed capital expenditure to any other category, line item or time period included in the Capital Expenditure Budget, other than a (1) negative 5% variance or any positive variance in the capital expenditure amount allocated to any specified line item in the Capital Expenditure Budget for maintenance capital expenditures or (2) 20% variance in the capital expenditure amount allocated to any specified line item in the Capital Expenditure Budget for construction capital expenditures (in each case, as compared to the anticipated capital expenditure amount allocated to such line item in the Capital Expenditure Budget for any calendar year) or (B) fail to make any capital expenditure as set forth in the Capital Expenditure Budget consistent in all material respects with the Capital Expenditure Budget (it being agreed that the timing of any capital expenditure within the time period applicable to such expenditure in the Capital Expenditure Budget shall be determined solely by the Company in its reasonable discretion); provided that in no event shall any Acquired Entity be deemed to be in breach of this Section 6.01(b)(xxi) to the extent such breach results from Buyer’s refusal to provide its consent in connection with the incurrence of Indebtedness pursuant to Section 6.01(b)(xviii);
(xxii) subject any of its assets to any Lien, except for a Permitted Lien;
(xxiii) offer or provide to any customer any incentive or other consideration in connection with such customer’s waiver of any customer accommodation or goodwill credits; or
(xxiv) agree or commit to do any of the foregoing.
Appears in 1 contract
Pre-Closing Obligations. (a) From the date of this Agreement until the ClosingClosing Date, except (i) as otherwise expressly contemplated, permitted or required by this AgreementAgreement or the other Transaction Agreements (including, for the avoidance of doubt, to effectuate the Pre-Closing Reorganization (in accordance with Annex A)), (ii) as required by Applicable Law, Permit (iii) as set forth in Section 5.01 of the Seller Disclosure Schedule, (iv) in connection with any Buyer-Approved Transaction, or (v) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), Seller shall use reasonable best efforts to, and to cause (1) the Company Entities to and (2) solely with respect to the Business, any Governmental Authorityother Subsidiaries of Seller involved in the conduct or operation of the Business to, (A) conduct the Business in the Ordinary Course of Business, and (B) comply with all Applicable Laws in all material respects; provided, that (x) no action by any Company Entity with respect to matters expressly permitted by an exception to a subclause of Section 5.01(b) will be deemed a breach of this Section 5.01(a) (unless such action constitutes a breach of another subclause of Section 5.01(b) for which no applicable exception to such other subclause is available), and (y) the Company Entities’ failure to take any action expressly prohibited by Section 5.01(b) will not in and of itself be deemed to be a breach of this Section 5.01(a).
(b) Without limiting the generality of the foregoing, from the date hereof until the Closing Date, except (i) as otherwise expressly contemplated, permitted or required by this Agreement or the other Transaction Agreements (including, for the avoidance of doubt, to effectuate the Pre-Closing Reorganization (in accordance with Annex A)), (ii) as required by Applicable Law, (iii) as set forth in Section 6.01 Section 5.01 of the Seller Disclosure Schedule or (iv) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed), the Company shall, and Seller (x) shall cause the other Acquired Company Entities to, (A) conduct their businesses in the ordinary course of business and (B) use commercially reasonable efforts not to continue with (1) the engineering, design and construction of the ▇▇▇▇▇▇▇▇ Facility and (2) bringing the ▇▇▇▇▇▇▇▇ Facility into commercial operations; provided that (x) no action by any Acquired Entity that is expressly permitted by an exception to a subclause of Section 6.01(b) will be deemed a breach of this Section 6.01(a) and (y) any Acquired Entity’s failure to take any action prohibited by Section 6.01(b) will not be a breach of this Section 6.01(a); provided, further, that (i) the Company shall be entitled, in its reasonable judgment, to determine the amount and timing of any Indebtedness incurred or expenditures made in connection with the foregoing clause (B) (subject to the Company’s compliance with Section 6.01(b)(xviii)) and (ii) in no event shall any Acquired Entity be deemed to be in breach of the foregoing clause (B) to the extent such breach results from Buyer’s refusal to provide its consent in connection with the incurrence of Indebtedness pursuant to Section 6.01(b)(xviii).
(b) Without limiting the generality of the foregoing, from the date hereof until the Closing, except (w) as permitted by this Agreement, (x) as required by Applicable Law, Permit or any Governmental Authority, (y) as set forth in Section 6.01 of the Disclosure Schedule or (z) with the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed, except in the case of Section 6.01(b)(xxiii), with respect to which Buyer may withhold, condition or delay its consent in its sole discretion), the Company shall not, and shall cause each other Subsidiary of Seller involved in the other Acquired Entities conduct and operation of the Business (in each case under this subclause (y), solely with respect to the Business) not to:
(i) (A) amend or modify (whether by merger, consolidation or otherwise) the Organizational Documents certificate of formation, certificate of incorporation, by-laws, memorandum, articles of association, operating agreement or any other comparable organizational document of any Acquired Entity or (B) consent to or execute and deliver any amendment or modification to the Organizational Documents of any JV Entity or take any action with respect to any JV Entity, in each case, in any manner adverse to Buyer or any Acquired Company Entity;
(ii) (A) adjust, split, combinesubdivide, combine or reclassify or amend the terms of any Shares Equity Interest in a Company Entity or (B) declare, set aside aside, make or pay any dividend or other distribution, other than, in prior to the case of this clause (B)Reference Time, (x) cash dividends or other cash distributions by the Company (or any of its direct or indirect wholly-owned Subsidiaries) to any SellerSeller (unless such cash dividends or other cash distributions would result in the Company Entities having Cash in an amount that is less than the Minimum Cash Threshold), or (y) cash distributions or other cash payments to as may facilitate the settlement or elimination of intercompany accounts between any Acquired Entitythe Company Entities, on the one hand, and any Seller and any of their respective its Affiliates, on the otherother hand, in each case under (x) and (y) aboveaccordance with Section 5.09; provided, solely to that, the extent paid prior to the Measurement Time and would foregoing shall not be reasonably likely to result in permit cash dividends or distributions of any Liability (including any Tax) of an Acquired Entity following the Closing (other than any Liability included in Closing Indebtedness or Closing Net Working Capital, as applicable)Restricted Cash;
(iii) enter into commit to make any Contract related capital expenditures (other than maintenance capital expenditures and purchases of office equipment in the Ordinary Course of Business) that Buyer or the Company Entities would be liable for following Closing, other than (x) commitments included in the Capex Schedule, and (y) unbudgeted capital expenditure commitments not to exceed $100,000 individually or $500,000 in the voting of its capital stock or Equity Interestsaggregate;
(iv) (A) issue, transfer, sell, pledge, grant, license, encumber or otherwise dispose ofof (whether by merger, transfer consolidation, disposition of Equity Interests or encumber otherwise), directly or indirectly, any Equity Interests Interest of any Acquired Entity or (B) merge or consolidate with any other PersonCompany Entity;
(v) redeem, purchase or otherwise acquire (directly or indirectly) any Equity Interest in any Company Entity;
(vi) other than acquisitions of Owned Real Property or Leased Real Property (which are addressed by Section 5.01(b)(xix) of this Agreement), acquire (whether by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material assets of (including or any material portion of assets constituting any business of or line of business of), or any Equity Interests in, any Person (other than Equity Interests in another Persona Company Entity which such acquisitions will be subject to Section 5.01(b)(v)) involving payments made by any Company Entity that exceeds $500,000 individually or Real Property, other than (A) as required pursuant to existing Contracts made available to Buyer; provided that no Acquired Entity shall exercise any option or purchase right to acquire Real Property, or (B) inventory, supplies, vehicles or equipment $2,000,000 in the ordinary course of businessaggregate;
(vivii) other than with respect to any Owned Real Property or Leased Real Property (which are addressed by Section 5.01(b)(xix) of this Agreement), sell, transfer, license or otherwise dispose of (whether by merger, consolidation, disposition of stock or assets assets, abandonment or otherwise), directly or indirectly, any material assets of the Business or Real Propertyof the Company Entities (including material Company Intellectual Property Rights and any other material asset contemplated by Annex A hereto to be transferred to the Company Entities as part of the Pre-Closing Reorganization), other than (A) pursuant to existing Contracts made available to Buyer the sale of inventory or non-exclusive licenses of Intellectual Property Rights, in each case, in the Ordinary Course of Business, or (B) sales the sale or disposition of inventory assets that are obsolete or no longer used by the Business in the ordinary course Ordinary Course of business;Business.
(viiviii) make any loans, advances or capital contributions to, or material investments in, any other Person, in excess of $500,000 individually and $2,000,000 in the aggregate other than loans, advances or capital contributions to, or investments in, any other Person of the Company Entities;
(including the JV Entities)ix) mortgage, pledge, create, incur or suffer to exist any Lien (other than any Permitted Lien) on any Equity Interest in any Company Entity, any material asset of any Company Entity or any material asset used in the operation of the Business, in each case, that (A) in that secures any obligations of any Person other than the ordinary course of business Company Entities or with respect to the Business, or (B) loansthat secures obligations of the Company Entities or with respect to the Business in an amount exceeding, advances individually or capital contributions toin the aggregate, or investments in, the Acquired Entities$2,000,000;
(viiix) create, incur, assume, guarantee or otherwise become liable for any additional indebtedness for borrowed money or issue or sell any debt securities of any Company Entity or calls, options, warrants or other rights to acquire any debt securities of any Company Entity (directly, contingently or otherwise), except for (x) any Indebtedness for borrowed money among the Company and its wholly-owned Subsidiaries, (y) Indebtedness for borrowed money in an amount not to exceed $500,000, individually or $2,000,000 in the aggregate or (z) additional Indebtedness for borrowed money created, incurred, assumed, guaranteed or that the Company Entities or the Business would otherwise become liable for, in the case of clause (z) in accordance with the Store Opening and Closure Plan;
(xi) other than as required by the terms of any Company Employee Benefit Plan in effect as of the date hereof or adopted or entered into after the date hereof as permitted by this Agreement or Applicable Law, (A) increase the compensation of any Company Employee, other than an increase of base salary or wage rate (and any corresponding proportionate increase in bonus) in the Ordinary Course of Business for any Company Employee; provided, that any such increase may not exceed 5% for any Company Employee with respect a title at or above Vice President and 3% in the aggregate for all Company Employees, (B) grant or provide any new severance, change of control, retention or termination pay or benefits to any Company Employee, current or former employee(C) establish, officer, director or other natural person service provider, (1) grant or increase any severance or termination entitlement to such individual (adopt or amend any existing severance collective bargaining agreement or termination pay arrangement) (other than severance granted in the ordinary course of business and relating to the settlement of any dispute in connection with the termination of the applicable Company Employee) or (2) enter into any employment, deferred compensation or other similar agreement with such individual (or amend any existing agreement), (B) increase compensation or other benefits payable to any Company Employee, current or former employee, officer, director or other natural person service provider, except increases to annual base salary with respect to any individual of not more than 8% of annual base salary in the ordinary course of business and consistent with past practice; provided that Buyer shall be deemed to have provided its consent to such increase if it does not respond to the Company within 10 Business Days of such written request, (C) increase bonuses payable to any Company Employee in a manner which is inconsistent with the current structure upon which bonuses are paid pursuant to the bonus structures set forth in Section 6.01(b)(viii) of the Disclosure Schedule, (D) establish, adopt, enter intointo or amend any Employee Benefit Plan or any other benefit or compensation plan, amendpolicy, modify program, Contract, agreement or terminate any Company arrangement that would be an Employee Benefit PlanPlan if in effect on the date hereof, other than in connection with (x) 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 or (y) the issuance of offer letter agreements to those individuals hired on or following the date hereof and not in contravention of this Agreement where such offer letter agreements provide for “at-will” employment and do not provide for any severance entitlements or (E) accelerate the vesting, lapsing of restrictions, or payment or fund or secure the payment in any way of any compensation or benefits with respect to any Company Employee or current or former employee, officer, director or natural person service provider of the Company or any Company Subsidiary;
(ix) other than as required by Applicable Law, (A) establish, enter into, adopt, renew, extend, or materially amend any Collective Bargaining Agreement or (B) recognize or certify any labor union, labor organization, works council, or group of Company Employees as the bargaining representative for any broad-based Seller Benefit Plan that is not targeted at Company Employees;
(xxii) except as may be required by a Collective Bargaining Agreement or any Employee Benefit Plan in effect as of the date hereof or adopted or entered into after the date hereof as permitted by this Agreement or Applicable Law, (1) hire or engage any person to be a Company Employee or service provider to an Acquired Entitythe Company Entities, other than except (x) in the hiring Ordinary Course of Business for any such individual with a title below the level of Vice President, (y) to fill a position that is open as of the date hereof or (z) to replace a Company Employee whose employment is terminated in the Ordinary Course of Business (by reason of involuntary termination, voluntary resignation or otherwise) prior to the Closing, or (2) implement employee layoffs or reductions in force that would trigger the Worker Adjustment and Retraining Notification Act of 1988 or any similar Laws or terminate the employment or engagement of employees or any service providers (A) with annual base compensation not in excess of $300,000 or (B) provider with a title of VP Vice President or below above, other than for cause, poor performance, unethical or inappropriate behavior (provided that the Acquired Entities shall determine the title of any such person in the ordinary course of business consistent each case, as determined in accordance with past practice);
(xixiii) terminate except for (x) renewals and extensions on substantially similar terms as those in effect as of the employment date hereof or in the Ordinary Course of Business, (y) any current Company Employee (A) with annual base compensation in excess automatic renewal or automatic termination of $200,000 other than for cause (as determined a Material Contract or a material Permit in accordance with past practice) the terms thereof, or (Bz) any Material Contract in accordance with a title of VP or above;
the Store Opening and Closure Plan, (xii) (A) waive, release or amend the restrictive covenant obligations of any current or former Company Employee, independent contractor, officer or director of the Acquired Entities or (B) fail to send a written communication relating to any breach of a restrictive covenant by any current or former Company Employee, independent contractor, officer or director of the Acquired Entities; provided that, if necessary in the reasonable judgment of the Company, the Company shall cause the Acquired Entities to enforce restrictive covenant obligations of any current or former Company Employee with a title of VP or above, officer or director of the Acquired Entities;
(xiii) (AA)(I) materially amend or adversely amend, renew, extend, modify, let lapse or voluntarily terminate any Material Contract or any material Permit or (II) waive any material right under any Material Contract, or (B) enter into any new Contract that would have been a Material Contract under clause (iii), (vii), (viii), (x), (xi), (xii) (other than, with than in respect to Material Contracts of any matter contemplated by Sections 3.09(a)(x(xvii) of this Section 5.01(b)), 3.09(a)(xi), 3.09(a)(xiii), 3.09(a)(xixor (xviii) of the definition thereof or 3.09(a)(xxi) or Contracts that would not reasonably be expected to involve any other clause of such definition if such Contract provides for annual payments by any Acquired Entity the Company Entities in excess of $1,000,000, in the ordinary course of business consistent with past practice, enter into any Material Contract, (C) waive, release or assign any material rights, claims or causes of actions under any Material Contract or (D) enter into, amend or modify any Related Party Transaction1,500,000;
(xiv) except as required by Applicable Lawwith respect to any Tax actions, Taxes or Tax Returns of the Seller Tax Group, (A) make any material Tax election inconsistent with past practicemake, (B) change or revoke any material Tax electionelection or method of accounting for Tax purposes, (B) settle or compromise any material Tax claim or liability, (C) change any method of annual accounting period for Tax accounting or annual Tax accounting periodpurposes, (D) surrender or compromise any right to claim for a refund of a material Tax refundamount of Taxes, (E) amend file any amended material Tax ReturnsReturn, (F) prepare or file any material Tax Returns in a manner materially inconsistent with past practice, (G) settle or compromise any Tax Claim or enter into any closing agreement or (G) waive or extend the statute of limitations in respect of any material Tax, amount of Taxes (H) other than pursuant to extensions of time to file any ruling request or application for Tax benefits with any Taxing Authority, (I) enter into or amend any Tax Sharing Agreement, (J) extend or waive Returns obtained in the statute Ordinary Course of limitations period applicable to any Tax or Tax Return or (K) take or permit any other Person to take any action that would reasonably be expected to result in a change of any Acquired Entity’s Tax classificationBusiness);
(xv) assign, transfer, lease, license (except for non-exclusive licenses granted in the ordinary course of business consistent with past practice), allow to lapse, cancel, abandon or otherwise dispose of or encumber any material Intellectual Property Rights (or disclose to any third party other than to Buyer or its Representatives, or any third-party service providers of the Acquired Entities in the ordinary course of business in connection with obtaining services from such third party, and subject to customary confidentiality obligations, any material Trade Secrets) owned, licensed, used or held for use by any Acquired Entity;
(xvi) make any change to the Company’s methods of financial accounting, except as required by changes in GAAP or other Applicable Law;
(xvi) waive or release any material claims against third parties owing in favor of any Company Entity, or otherwise owing in favor of Seller or any of its Subsidiaries (other than the Company Entities) to the extent that the underlying claim (or portion thereof) relates to the Business, for an amount in excess of $500,000 individually or $2,000,000 in the aggregate (it being understood that claims contemplated by this clause (xvi) shall in no event include any claim, suit, action, litigation, arbitration, mediation, complaint, petition, demand, dispute resolution, proceeding, hearing, audit, examination or investigation, each of which shall be subject to clause (xvii) below and not this clause (xvi));
(xvii) settle, compromise or permit any Company Entity to settle or compromise, any pending or threatened claim, suit, action, litigation, arbitration, mediation, complaint, petition, demand, dispute resolution, proceeding, hearing, audit, examination or investigation brought by any third party either (x) against a Company Entity or (y) otherwise against Seller or any of its Subsidiaries (other than the Company Entities) to the extent that the underlying allegations (or a portion of the underlying allegations) therein relate to the Business, except for any such claim, suit, action, litigation, arbitration, mediation, complaint, petition, demand, dispute resolution, proceeding, hearing, audit, examination or investigation that (A) involves a monetary Damages payable to a third party in an amount that either (I) does not exceed $2,000,000 individually or $15,000,000 in the aggregate, in each case net of insurance or self-insurance proceeds actually received by the Company Entities or the Business prior to Closing in respect of such claim or claims; or (II) involves monetary Damages payable to a third party in an amount that is fully covered under any insurance policy of Seller or the Company Entities or is equal to or less than the amount of reserves reflected on the Financial Statements in respect of such matter, (B) does not involve any injunctive or equitable relief or impose non-monetary restrictions on the Business or operations of the Company Entities or any of their Affiliates (other than customary confidentiality obligations and other customary obligations attendant to monetary settlements, in each case, that do not, and would not reasonably be expected to, impose any material restriction on the Business or any Company Entity), (C) does not involve any admission of any wrongdoing or admission of any violation of Applicable Law by any Company Entity, or (D) includes a full release of the Company Entities;
(xviii) adopt a plan or agreement of complete or partial liquidation liquidation, dissolution, merger, consolidation, restructuring, recapitalization or dissolution other reorganization with respect to any Company Entity or restructure or reorganizeotherwise alter the corporate structure of any Company Entity;
(xviiixix) incur (a) acquire or guaranty dispose of any Indebtedness material real property, Material Owned Real Property or Material Leased Real Property (in excess each case, whether by merger, consolidation, acquisition or disposition (as applicable) of $1,000,000assets or stock, or otherwise), (b) grant any Lien on any Owned Real Property or Leased Real Property (other than Permitted Liens) or (Ac) pursuant materially amend, waive or voluntarily terminate any Real Property Lease, or extend or fail to exercise any renewal option under any Real Property Lease, in each case other than in accordance with the existing Second Amended Store Opening and Restated Loan and Security Agreement, dated as of January 13, 2022, by and between the Company and ▇▇▇▇▇ Fargo Bank, National Association, as amendedClosure Plan and, in the ordinary course case of business or for any Permitted Construction Loan and clause (B) if the Closing has not occurred within six months c), on substantially similar terms as those in effect as of the date hereof, loans, on commercially reasonable terms, for the purpose of funding construction of the new facilities listed in Section 6.01(b)(xviii) of the Disclosure Schedule in an amount for each such facility not to exceed, in the aggregate, the amount listed opposite such facility in Section 6.01(b)(xviii) of the Disclosure Schedule; provided that (x) the consummation of the transactions contemplated hereby or by the other Transactions Agreements will not breach, result in the loss of any benefit under, be a default (or an event that, with or without notice or lapse of time, or both, would be a default) under, result in the termination, cancelation or amendment of or a right of termination, cancelation, consent or amendment under, accelerate the performance required by, or result in the creation of any Lien on any of the assets of the Acquired Entities (other than as set forth in clause (y) below) under, any Contract entered taking into in connection with any Indebtedness incurred pursuant to the foregoing clause (B) and (y) no Acquired Entity will grant any Lien on any of its assets in connection with any Indebtedness incurred pursuant to the foregoing clause (B) other than a Lien on the facility (and ancillary assets directly related to such facility) with respect to which the Indebtedness incurred pursuant to the foregoing clause (B) is obtained; provided, further, that, in the event the Company seeks the prior written consent of Buyer in connection with this Section 6.01(b)(xviii), Buyer shall be deemed to have provided its consent if it does not respond to the Company within 10 Business Days of such written request;
(xix) repurchase, redeem or otherwise acquire any Equity Interests of any Acquired Entityaccount market adjustments;
(xx) (A) waive, release or assign make any material right or Claim of any Acquired Entity or (B) settle or compromise any Claim against any Acquired Entity (1) where change in the settlement or compromise involves injunctive or other equitable relief against any Acquired Entity (other than customary confidentiality obligations) or involves any material Intellectual Property Rights or (2) if such settlement or compromise would result in such Acquired Entity paying after the Closing an amount (excluding any deductibles under insurance policies) more than $1,000,000 in excess cash management practices of the proceeds Company Entities and the Business with respect to be receivedthe collection of accounts receivable and payment of accounts payables, if any, from any insurance policies except as required by changes in GAAP or any third-party indemnitor in connection with such settlement or compromise;Applicable Law; or
(xxi) agree to do, announce any intention to do, approve, authorize or commit to do, or enter into any Contract committing or agreeing to do, any of the actions described in the preceding clauses (i) through (xx); provided that, notwithstanding anything to the contrary contained herein:
(A) fund nothing in this Agreement shall restrict Seller, any capital expenditure in Company Entity or any calendar year in a manner not reflected in of their respective Affiliates from, prior to the Capital Expenditure BudgetReference Time, in each case, including by reallocating the amount of any proposed capital expenditure to any other category, line item or time period included in the Capital Expenditure Budget, other than a (1) negative 5% variance distributing or dividending Cash of any Company Entity or the Business on hand or at banks (excluding, for the avoidance of doubt, any Restricted Cash) so long as (x) such dividends or store-level distributions do not result in the Company Entities, as a whole, having an amount of Cash less than the Minimum Cash Threshold as of the Closing and (y) such store-level distributions of Cash do not result in any individual discount retail store under the brand name Family Dollar or any positive variance Co-Branded Store having, at the time of Closing, an amount of Cash held in store registers or otherwise physically located on the premises of such discount retail store operating under the brand name Family Dollar or such Co-Branded Store, as applicable, in an amount less than the amount required to continue to operate in the capital expenditure amount allocated to any specified line item in the Capital Expenditure Budget for maintenance capital expenditures or Ordinary Course of Business, (2) 20% variance in the capital expenditure amount allocated to repay or settle any specified line item in the Capital Expenditure Budget indebtedness for construction capital expenditures (in each case, as compared to the anticipated capital expenditure amount allocated to such line item in the Capital Expenditure Budget for any calendar year) or (B) fail to make any capital expenditure as set forth in the Capital Expenditure Budget consistent in all material respects with the Capital Expenditure Budget (it being agreed that the timing of any capital expenditure within the time period applicable to such expenditure in the Capital Expenditure Budget shall be determined solely by the Company in its reasonable discretion); provided that in no event shall any Acquired Entity be deemed to be in breach of this Section 6.01(b)(xxi) to the extent such breach results from Buyer’s refusal to provide its consent in connection with the incurrence of Indebtedness pursuant to Section 6.01(b)(xviii);
(xxii) subject any of its assets to any Lien, except for a Permitted Lien;
(xxiii) offer or provide to any customer any incentive or other consideration in connection with such customer’s waiver of any customer accommodation or goodwill credits; or
(xxiv) agree or commit to do any of the foregoing.borrowed money
Appears in 1 contract
Sources: Membership Interest Purchase Agreement (Dollar Tree, Inc.)