Conduct of Business by Target Pending the Closing. Target agrees that, between the date hereof and the earlier of the termination of this Agreement or the Effective Time (the “Interim Period”), except as set forth in Section 6.1 of the Target Disclosure Letter, unless Parent shall otherwise agree in writing (which agreement shall not be unreasonably withheld or delayed), Target and its Subsidiaries will conduct their respective operations only in the ordinary and usual course of business consistent with past practice, and will use commercially reasonable efforts to keep available the services of their respective current key officers and employees and preserve their respective current relationships with their customers, suppliers and other Persons with whom they have business relationships as and preserve intact their respective business organization and goodwill. Without limiting the foregoing, and as an extension thereof, except as set forth in Section 6.1 of the Target Disclosure Letter, neither Target nor any of its Subsidiaries shall, during the Interim Period, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed): (a) amend or otherwise change its articles of incorporation, by-laws or equivalent organizational documents, or adopt or implement any shareholder rights plan; (b) (i) increase the compensation or benefits payable or to become payable to any director, officer, employee or consultant of Target or any of its Subsidiaries, except for annual merit increases for non-managers in the ordinary course of business consistent with past practice or in accordance with any agreement set forth in Section 6.1 of the Target Disclosure Letter; (ii) pay or accrue any bonus to any director, officer, employee or consultant of Target or any of its Subsidiaries, except for the $1,200,000 payment to be made by Target immediately prior to Closing to certain of its officers (the “Target Management Bonus”) or as is consistent with past practice; (iii) grant any rights to severance or termination pay to, or enter into or amend any employment, severance or other agreement with, any director, officer or other employee or consultant of Target or any of its Subsidiaries, except for the Management Employment Agreements; (iv) establish, adopt, accelerate, enter into, amend or increase the benefits under any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, employee or consultant of Target or any of its Subsidiaries, except as required by applicable Law or the terms of any existing plans as in effect on the date hereof; or (v) take any affirmative action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Target Benefit Plans or Subsidiary Benefit Plans; (c) issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any stock or other securities of any of Target or its Subsidiaries (whether by merger, consolidation or otherwise), or any securities convertible or exchangeable or exercisable therefor, or any options, warrants or other rights of any kind to acquire any stock or other securities of Target or any of its Subsidiaries or such convertible or exchangeable securities, or any other ownership interest (including, without limitation, any such interest represented by contract right), of Target or any of its Subsidiaries other than (i) the issuance of up to an aggregate of 75,000 Target Options having an exercise price of $8.00 per share of Target Common Stock to new employees hired by Target during the Interim Period, (ii) the issuance of shares of Target Common Stock upon the exercise of Target Options outstanding as of the date of this Agreement or granted in conformity with clause (i) above, and (iii) the issuance of shares of Target Common Stock upon the exercise of the Target Warrants; (d) sell, lease, license, exchange, mortgage, pledge, transfer, encumber or otherwise dispose of, any of its assets or properties (whether by merger, consolidation or otherwise), except for (i) dispositions of assets, goods, services or inventories in the ordinary course of business and consistent with past practice; (ii) the sale of unused or obsolete equipment; or (iii) pursuant to existing contracts or commitments; (e) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any Target Capital Stock or enter into any agreement with respect to the voting of any Target Capital Stock or any capital securities of any of Target’s Subsidiaries; provided, however, that this clause (e) shall not apply to inter-company dividends or other inter-company distributions payable as between Target and one or more Subsidiaries of Target or any dividends paid in accordance with the terms of the Target Preferred Stock; (f) (i) redeem, purchase or otherwise acquire, any Target Capital Stock, or any options, warrants or conversion or other rights (including any stock appreciation rights, phantom stock or similar rights) to acquire any Target Capital Stock; (ii) adopt a plan with respect to or effect any liquidation, dissolution, restructuring, reorganization or recapitalization; or (iii) split, subdivide, combine, recapitalize, reclassify or exchange any Target Capital Stock, or enter into any similar event or transaction pursuant to which the number of outstanding shares of any class or series of Target Capital Stock is changed into a different number of shares; (g) acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the assets or properties of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire any assets or properties of any other Person (other than the purchase of assets or properties from suppliers or vendors in the ordinary course of business and consistent with past practice); (h) (i) incur any indebtedness for borrowed money or purchase money indebtedness (including as a guarantor or surety), issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money; except for (a) borrowings under revolving credit lines existing as of the date hereof, (b) borrowings under its revolving credit lines to pay accrued and unpaid dividends on the Target Preferred Stock, (c) indebtedness owing to, or guaranties of indebtedness owing to, Target, and (d) leasing contracts entered into in the ordinary course of business; (ii) refinance or otherwise replace any of its existing indebtedness, except upon terms which are not less favorable in any material respect to Target than the terms of the indebtedness being refinanced, (iii) make or incur any capital expenditure other than capital expenditures made or incurred in the amounts and within the approximate timeframes provided for in the capital expenditure budget of Target for 2007 provided to Parent prior to the date hereof; or (iv) make any loan or advance to any RPS Securityholder or any director, officer, employee or consultant of Target or any of its Subsidiaries other than (x) advances of ordinary business expenses and (y) loans or advances to employees in the ordinary course of business consistent with past practice and in principal amounts of not more than $10,000; (i) make any Tax election or enter into any agreement in respect of Taxes, including without limitation the settlement of any Tax controversy, claim or assessment except as required by Law or adopt or change any accounting method in respect of Taxes, or surrender any right to claim a refund of Taxes; (j) enter into any agreement or arrangement that if in effect on the date hereof would be required to be listed in Section 3.15(a) of the Target Disclosure Letter; (k) terminate or cancel any Target Scheduled Contract; (l) change any of its methods, principles or practices of accounting or internal controls or any of its sales, credit or collection policies or practices in effect as of the date hereof in any material respect, other than as required by applicable Law, GAAP or any Governmental Authority; (m) waive, release, assign, settle or compromise any material Claim; (n) modify, amend or terminate, or waive, release or assign any material rights or claims including those under any existing standstill provision relating to a Target Acquisition Proposal, or under any similar confidentiality or other agreement, or fail to fully enforce any such agreement; (o) take any action or fail to take any action that is intended or would reasonably be expected to result in any of the conditions set forth in Article VII not being satisfied; or (p) authorize or enter into any agreement or otherwise make any commitment to do any of the foregoing.
Appears in 3 contracts
Samples: Merger Agreement (Research Pharmaceutical Services, Inc.), Merger Agreement (Research Pharmaceutical Services, Inc.), Merger Agreement (Research Pharmaceutical Services, Inc.)
Conduct of Business by Target Pending the Closing. Target agrees that, between the date hereof and the earlier of the termination of this Agreement or the Effective Time (the “Interim Period”), except as set forth in Section 6.1 5.1 of the Target Disclosure LetterDiligence Letter or as specifically permitted or required by any other provision of this Agreement, unless Parent shall otherwise agree in writing (which agreement shall not be unreasonably withheld or delayed)writing, Target and its Subsidiaries will conduct their respective its operations only in the ordinary and usual course of business consistent with past practice, which shall include the raising of investment capital prior to the filing of the Registration Statement, and will use commercially reasonable efforts to keep available the services of their respective its current key officers and employees and preserve their respective its current relationships with their such of those customers, suppliers and other Persons with whom they have Target has significant business relationships as and is reasonably necessary to preserve substantially intact their respective its business organization and goodwill. Without limiting the foregoing, and as an extension thereof, except as set forth in Section 6.1 5.1 of the Target Disclosure LetterDiligence Letter or as specifically permitted or required by any other provision of this Agreement, neither Target nor any of its Subsidiaries shallshall not (unless required by applicable Law), during the Interim Period, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed):
(a) amend or otherwise change its articles of incorporation, by-laws or equivalent organizational documents, or the Target Governing Documents;
(b) adopt or implement any shareholder rights plan;
(bc) change the composition or membership of the Target Board, or remove from office (whether voluntary or involuntary) any officer of Target;
(d) (i) increase the compensation or benefits payable or to become payable to any director, officer, employee or consultant of Target or any of its SubsidiariesTarget, except for annual merit increases for non-managers in the ordinary course of business consistent with past practice or and increases resulting from the operation of compensation arrangements in accordance with any agreement set forth in Section 6.1 of effect prior to the Target Disclosure Letterdate hereof; (ii) pay or accrue any bonus to any director, officer, employee or consultant of Target or any of its SubsidiariesTarget, except for the $1,200,000 payment to be made by Target immediately prior to Closing to certain of its officers (the “Target Management Bonus”) or as is consistent in accordance with past practiceestablished practices therefor; (iii) grant any rights to severance or termination pay to, or enter into or amend any employment, employment or severance or other agreement with, any director, officer or other employee or consultant of Target except to the extent such severance or any of its Subsidiaries, except for termination pay is due before the Management Employment AgreementsEffective Time; or (iv) establish, adopt, accelerate, enter into, into or amend or increase the benefits under any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, employee or consultant of Target or any of its SubsidiariesTarget, except as required by applicable Law or the terms of any existing plans as in effect on the date hereof; or (v) take any affirmative action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Target Benefit Plans or Subsidiary Benefit PlansLaw;
(ce) issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any stock shares of Target Common Stock or any other securities of any of Target or its Subsidiaries (whether by merger, consolidation or otherwise), or any securities convertible or exchangeable or exercisable thereforfor any shares of Target Common Stock or any other securities of Target, or any options, warrants or other rights of any kind to acquire any stock shares of Target Common Stock or any other securities of Target or any of its Subsidiaries or such convertible or exchangeable securities, or any other ownership interest (including, including without limitation, limitation any such interest represented by contract right)) of Target, of Target except in accordance with past practice or any of its Subsidiaries other than (iin accordance with the contemplated transactions described in Section 5.1(e) the issuance of up to an aggregate of 75,000 Target Options having an exercise price of $8.00 per share of Target Common Stock to new employees hired by Target during the Interim Period, (ii) the issuance of shares of Target Common Stock upon the exercise of Target Options outstanding as of the date of this Agreement or granted in conformity with clause (i) above, and (iii) the issuance of shares of Target Common Stock upon the exercise of the Target WarrantsDiligence Letter;
(df) sell, lease, license, exchange, grant, mortgage, pledge, guarantee, transfer, encumber or otherwise dispose of, or agree to or authorize the sale, lease, license, exchange, grant, mortgage, pledge, guarantee, transfer, encumbrance or disposition of, any of its assets or properties with a value in excess of $5,000 (whether by merger, consolidation or otherwise), except for (i) dispositions of assets, goods, services or inventories in the ordinary course of business and consistent with past practice; (iii) the sale of unused or obsolete equipment; or (iii) pursuant to existing contracts or commitments;
(eg) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any the Target Capital Common Stock or enter into any agreement with respect to the voting of any Target Capital Stock or any capital securities of any of Target’s Subsidiaries; provided, however, that this clause (e) shall not apply to inter-company dividends or other inter-company distributions payable as between Target and one or more Subsidiaries of Target or any dividends paid in accordance with the terms of the Target Preferred Common Stock;
(fh) (i) redeem, purchase or otherwise acquire, or agree to redeem, purchase or otherwise acquire, any shares of Target Capital Common Stock or any securities or obligations convertible into or exchangeable for any shares of Target Common Stock, or any options, warrants or conversion or other rights (including any stock appreciation rights, phantom stock or similar rights) to acquire any shares of Target Capital StockCommon Stock or any such securities or obligations; (ii) adopt a plan with respect to or effect any liquidation, dissolution, restructuring, reorganization or recapitalization; or (iii) split, subdivide, combine, recapitalize, combine or reclassify or exchange any Target Capital Stock, or enter into any similar event or transaction pursuant to which the number of outstanding shares of Target Common Stock or issue or authorize or propose the issuance of any class other securities in respect of, in lieu of or series in substitution for shares of Target Capital Stock is changed into a different number of sharesCommon Stock;
(gi) acquire or agree to acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the assets or properties of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets or properties of any other Person Person, including without limitation any rigs, compressors, pump jacks or other capital equipment regularly used in connection with any drilling operations (other than the purchase of assets or properties that are not individually in excess of $5,000, or in the aggregate in excess of $20,000 per month, from suppliers or vendors in the ordinary course of business and consistent with past practice);
(hj) (i) incur any indebtedness for borrowed money or purchase money indebtedness (including as a guarantor or surety), issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person for borrowed money; , except to the extent that the aggregate indebtedness for (a) borrowings under revolving credit lines existing as borrowed money of the date hereof, (b) borrowings under its revolving credit lines to pay accrued and unpaid dividends on the Target Preferred Stock, (c) indebtedness owing to, or guaranties of indebtedness owing to, Target, and (d) leasing contracts entered into in the ordinary course of businessat any time outstanding does not exceed $5,000; (ii) refinance or otherwise replace any of its existing indebtedness, except upon terms with the consent of Parent, which are consent shall not less favorable in any material respect to Target than the terms of the indebtedness being refinanced, be unreasonably withheld; (iii) make or incur any capital expenditure other than capital expenditures made in excess of $5,000 individually, or incurred in the amounts and within the approximate timeframes provided for aggregate in excess of $20,000 per month, except in the capital expenditure budget ordinary course of Target for 2007 provided to Parent prior to the date hereofbusiness consistent with past practice; or (iv) make any loan or advance to any RPS Securityholder Target Shareholder or any director, officer, employee or consultant of Target Target;
(k) (i) pre-pay any long-term debt in an amount exceeding $5,000 in the aggregate, or pay, discharge or satisfy any Liabilities, except for borrowings under revolving credit lines existing as of its Subsidiaries other than (x) advances of ordinary business expenses and (y) loans or advances to employees the date hereof in the ordinary course of business consistent with past practice and in principal amounts accordance with their terms; (ii) fail to collect notes or accounts receivable in the ordinary course of not more than $10,000business consistent with past practice or enter into a factoring or discounting arrangement with a third party with respect to accounts receivable; or (iii) fail to pay any account payable in the ordinary course of business consistent with past practice;
(il) terminate, cancel or request any material change in, or agree to any material change in, any contract that is reasonably necessary for the conduct of Target’s business as it is currently conducted other than in the ordinary course of business consistent with past practice;
(m) commit to participate in the drilling of any new well in a new prospect or elect to become a non-consenting party with respect to any operation or capital expenditure proposed by a third Person;
(n) enter into any Hydrocarbon sales, exchange, processing or transportation contract with respect to any of Target’s assets or properties having a term in excess of one year that is not terminable without penalty upon notice of 30 days or less;
(o) file any amended Tax Return, make any Tax election or enter into any agreement in respect of Taxes, including without limitation the settlement of any Tax controversy, claim or assessment except as required by Law assessment, or adopt or change any accounting method in respect of Taxes, or surrender any right to claim a refund of Taxes, if such action would have the effect of increasing by a material amount the present or future Tax Liability of Target or the Surviving Corporation, or would give rise to a Tax lien (other than statutory Liens for current Taxes not yet due) on any of Target’s or the Surviving Corporation’s assets or properties except in accordance with Section 5.1(o) of the Target Diligence Letter;
(jp) write up, write down or write off the book value of any of its assets, individually or in the aggregate, except for depreciation and amortization and any write-down of goodwill in accordance with GAAP and any write-offs of inventory or accounts receivable that do not exceed $5,000 individually or $20,000 in the aggregate.
(q) take any action to exempt Target from the provisions of any state takeover law or state law that purports to limit or restrict business combinations or the ability to acquire or vote shares of any Person (other than Merger Sub) or any action taken thereby, which Person or action would have otherwise been subject to the restrictive provisions thereof and not exempt therefrom;
(r) open or close, or enter into an agreement to open or close, any facility or office;
(s) fail to be in material compliance with the terms of any instrument evidencing indebtedness incurred by Target, other than any such failure that is waived in writing by the party to whom such indebtedness is owed within a reasonable time after the commencement of such material non-compliance, and provided Parent receives a copy of such waiver within a reasonable time thereafter;
(t) enter into any agreement or arrangement outside the ordinary course of business consistent with past practice that if in effect on the date hereof would be required contains any non-compete or exclusivity provisions with respect to be listed in Section 3.15(a) any customer, line of the business or geographic area with respect to Target Disclosure Letter;
(k) terminate or cancel any Target Scheduled Contract;
(l) change any of its methods, principles or practices of accounting or internal controls or any of its salesor the Surviving Corporation’s current or future Affiliates, credit or collection policies that limits or practices in effect as of otherwise restricts Target prior to the date hereof Effective Time, or that would, at or after the Effective Time, limit or restrict the Surviving Corporation, from engaging in any material respectbusiness in the United States, or that restricts the conduct with respect to any customer of any line of business by Target or any of its or the Surviving Corporation’s current or future Affiliates, or any geographic area in which Target or any of its or the Surviving Corporation’s current or future Affiliates may conduct business, or that otherwise restricts the operation of Target’s business, in each case other than as required non-compete agreements signed by applicable Law, GAAP or any Governmental Authorityemployees incident to their employment by Target;
(mu) waive, release, assign, settle take any formal action or compromise grant any material Claimconsent or approval concerning any joint venture outside the ordinary course of business consistent with past practice;
(nv) take, or agree to take, any action that would prevent the Merger from qualifying as a tax-free reorganization within the meaning of Section 368(a)(2)(E) of the Code;
(w) modify, amend or terminate, or waive, release or assign any material rights or claims including those under with respect to, or grant any consent under, any existing standstill provision relating to a Target Acquisition Proposal, or under any similar confidentiality or other agreement, or fail to fully enforce any such agreement;
(ox) change any of its methods, principles or practices of accounting or internal controls in effect as of the date hereof, other than in the ordinary course of business consistent with past practice or as required by applicable Law, GAAP or any Governmental Authority;
(y) waive, release, assign, settle or compromise any material claims, or any material Litigation or arbitration, if such waiver, release, assignment, settlement or compromise would require any material payment by the Surviving Corporation at or after the Effective Time;
(z) take any action or fail to take any action that is intended or would reasonably be expected to result in any a Target Material Adverse Effect, the breach of the conditions set forth a representation or warranty, a breach of a covenant or agreement, or a failure of a condition to Closing in Article VII not being satisfiedthis Agreement; or
(paa) authorize or enter into any agreement or otherwise make any commitment to do any of the foregoing.
Appears in 1 contract
Samples: Merger Agreement (TBX Resources Inc)
