Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions. (b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to: (i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock; (ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans; (iii) grant any Person any right to acquire any shares of its capital stock; (iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary; (v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice; (vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing; (vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person; (viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement; (ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year; (x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing; (xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount; (xii) amend or waive any provision of the Charter Documents; (xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied; (xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time; (xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity; (xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law; (xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000; (xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or (xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan. (c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 3 contracts
Samples: Merger Agreement (American Greetings Corp), Merger Agreement (American Greetings Corp), Merger Agreement (American Greetings Corp)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the earlier of the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, Article VII and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed and shall be deemed to have been given if Parent does not object in writing within three (3) Business Days after a written request for such approval is delivered to Parent by the Company), (iii) as may be contemplated, required or permitted by this Agreement, or (iv) as set forth in Section 5.1(a) of the Company Disclosure ScheduleLetter, or the Company shall, and shall cause each of its Subsidiaries to, use its commercially reasonable efforts to conduct the Company’s business in the ordinary course consistent with past practice and preserve in all material respects its business organization and maintain in all material respects existing relations and goodwill with Governmental Entities, customers, suppliers, creditors, lessors, officers and employees.
(iiib) as otherwise consented Subject to by Parent with respect to the exceptions contained in clauses (Ai) through (iv) of Section 5.1(a), between the date hereof and (B) below the earlier of the Effective Time and the Termination Date, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayeddelayed and shall be deemed to have been given if Parent does not object in writing within three (3) Business Days after a written request for such approval is delivered to Parent by the Company), the Company willshall not, and will cause each shall not permit any of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain it being understood and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no hereby agreed that if any action which would materially and adversely affect or delay the ability of is expressly permitted by any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoingfollowing subsections, between the date hereof and the Effective Time, except (i) as set forth in such action shall be expressly permitted under Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v5.1(a), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:):
(i) adjustamend its memorandum of association, split, combine bye-laws or reclassify any capital stock or otherwise amend the terms of its capital stockother applicable governing instruments;
(ii) makesplit, declare combine, consolidate, subdivide or pay reclassify any dividendshares of capital stock of the Company;
(iii) issue, sell, pledge, grant, transfer, encumber or otherwise dispose of any shares of capital stock or other equity interests of the Company or any of its Subsidiaries, or make any other distribution onsecurities convertible into or exchangeable for, or directly options, warrants, calls, commitments or indirectly redeem, purchase or otherwise acquire or encumberrights of any kind to acquire, any shares of its capital stock of the Company or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its Subsidiaries (other than (A) the issuance of Company Common Shares upon the exercise of Company Options outstanding as of the date of this Agreement, (B) in satisfaction of obligations pursuant to contracts or Company Benefit Plans existing as of the date hereof, (C) issuances or grants under the ESPP with respect to the offering period in effect on the date of this Agreement, (D) by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company or (E) pursuant to net settlements or exercises of outstanding Company Options or Company LTIP Awards in satisfaction of the exercise price and/or tax withholding relating to such award);
(iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to the Company’s capital stock, stock (except (A) for dividends or other distributions paid by any direct or indirect wholly wholly-owned Subsidiary to the Company or to any other direct or indirect wholly wholly-owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing Subsidiary and (B) in connection with the cashless exercises dividend equivalent rights prescribed pursuant to the exercise terms of stock options issued and the Company Benefit Plans outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary);
(v) purchasemake any acquisition (whether by merger, sellconsolidation, transfer, mortgage, encumber or otherwise dispose acquisition of stock or assets) of any properties interest in any Person or any division or assets having thereof outside of the ordinary course of business with a value or purchase price in the aggregate in excess of $1,000,000 5,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary)transaction or series of related transactions, other than encumbrances, acquisitions or dispositions pursuant to Contracts contracts in effect as of the date of this Agreement or Agreement, which are listed on Section 5.1(b)(v) of the Company Disclosure Letter;
(vi) other than in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedulebusiness, make any investment in excess of $5,000,000 in the aggregateloans, whether by purchase of stock advances or securities of, capital contributions to capital to, or purchase investments in any Person (other than the Company or any direct or indirect wholly-owned Subsidiary of any property or assets of any other Person;
(viiithe Company) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions loans, advances, capital contributions or investments pursuant to Contracts contracts in effect as of the date of this AgreementAgreement or to employees, consultants and directors in the ordinary course of business;
(vii) other than in the ordinary course of business, incur or assume any indebtedness, other than (A) short-term indebtedness, including commercial paper, (B) indebtedness under the Company’s existing credit facilities or commercially reasonable replacement facilities and (C) in order to refinance any existing indebtedness at the maturity thereof or on terms more favorable in the aggregate to the Company;
(viii) settle or compromise any litigation, claim or other proceeding against the Company or any of its Subsidiaries other than settlements or compromises where the amounts paid or payable by the Company or any of its Subsidiaries in settlement or compromise of any such litigation, claim or other proceeding exceed $3,000,000, in the aggregate;
(ix) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its material assets, other than (A) sales, leases and licenses in the ordinary course of business, (B) dispositions of assets no longer used in the operation of the business, (C) sales, leases and licenses that are not material to the Company or (D) factoring of accounts receivable;
(x) except as required by any existing agreements, Company Benefit Plans, or applicable Law or as permitted by Section 5.1(b)(iii) of this Agreement, (A) increase the compensation or other benefits payable or provided to the Company’s directors or executive officers; (B) except in the ordinary course of business, increase the compensation or other benefits payable or provided to the Company’s employees that are not directors or executive officers; or (C) except in the ordinary course of business consistent with past practice, establish, adopt, enter into, renew, extend, into or amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereofor plan, (A) increase in any manner the compensation agreement or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be have been a Company Benefit Plan if had it been in effect on the date hereof (other than (i) entering into employment agreements for new hires who are not officers that provide severance benefits and compensation opportunities (excluding equity-based compensation) consistent with employees holding a similar position with the Company or its Subsidiaries and (Fii) enter into, amend, alter, adopt, implement amendments required to maintain the Tax qualified or otherwise make registered status of any commitment to do any of the foregoingCompany Benefit Plan);
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle adopt or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidationamalgamation, restructuring, recapitalization consolidation or other reorganization of such entity;the Company or any of its Subsidiaries (other than the Merger); or
(xvixii) implement or adopt except as may be required by a change in GAAP, make any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or disputepolicies, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planpractices.
(c) For purposes of this Section 5.1 Between the date hereof and the definition Effective Time, Parent and Merger Sub shall not, and shall not permit any of Company Material Adverse Effecttheir respective Subsidiaries or Affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to, impair, prevent or delay (i) the consent ability of any Officer Shareholder will be deemed Parent or Merger Sub to perform its obligations under this Agreement or (ii) the consent consummation of Parentthe transactions contemplated by this Agreement.
Appears in 2 contracts
Samples: Merger Agreement (Lexmark International Inc /Ky/), Merger Agreement (Kofax LTD)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be set forth in this Agreement or (iv) as set forth in Section 5.1 of the Company willDisclosure Schedule, the business of the Company and will cause each of its Subsidiaries to (A) conduct its business in all material respects shall be conducted in the ordinary course consistent with past practice, (B) of business and the Company agrees to use its commercially reasonable efforts to maintain and preserve substantially intact its business organization and advantageous business relationships and organizations, to retain keep available the services of those of their present officers, employees and workforce generally and to preserve their present relationships with significant customers and suppliers. The Company agrees with Parent, on behalf of itself and its key officers and key employeesSubsidiaries, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, that between the date hereof and the Effective Time, except (i) as may be required by Law, (ii) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as may be specifically set forth in this Agreement or (iv) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, splitand shall not permit any of its Subsidiaries that is not wholly owned to, combine authorize or reclassify pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or otherwise amend other securities of the terms Company or its Subsidiaries), except (A) dividends and distributions paid or made on a pro rata basis by Subsidiaries in a manner consistent with past practice and (B) that the Company may continue to pay regular quarterly cash dividends on the Company Common Stock of its capital stocknot more than $0.41 per share;
(ii) makeshall not, declare and shall not permit any of its Subsidiaries to, split, combine, recapitalize or pay any dividendreclassify, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any in substitution for, shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another which remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(viii) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions except as required pursuant to Contracts existing written agreements or employee benefit plans in effect as of the date hereof, shall not, and shall not permit any of this Agreement its Subsidiaries to (A) increase the compensation or other benefits payable or to become payable to its directors, officers or employees (other than (1) in the ordinary course of business and consistent in all material respects with past practice, or (2) pursuant to the normal annual salary, bonus and compensation review process, in each case in a manner consistent therewith as to timing and percentage increase), (B) other than in the ordinary course of business consistent in all material respects with past practice;
(vi) incur, assumegrant any severance or termination pay to, guaranteeor enter into any severance agreement with any director, prepay officer or become obligated with respect to any indebtedness for borrowed money employee of the Company or offer, place or arrange any issue of debt securities, other than any of its Subsidiaries, (C) enter into any employment agreement with any executive officer of the foregoing that is Company, or (D) except (x) pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, a collective bargaining agreement in the ordinary course of business consistent with past practice or (y) as otherwise permitted pursuant to clauses (B) and (C) of this paragraph, establish, adopt, enter into or amend any plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries;
(iv) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) approve or authorize any action to be submitted to the stockholders of the Company for approval that is intended or would not reasonably be expected to, prevent, impede, interfere with, delay or postpone the transactions contemplated by this Agreement, including at its Annual Meeting of stockholders;
(vi) except in respect of the Merger, or any mergers, consolidations or business combinations among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, authorize, propose or announce an intention to delayauthorize or propose, adversely affect or impede Parent’s ability to obtain enter into agreements with respect to, any mergers, consolidations or business combinations or any acquisition of any business or stock or assets of any person that comprise or constitute a business organization or division thereof with a value or purchase price (inclusive of long-term indebtedness incurred or assumed in connection therewith) in the Financingaggregate in excess of $20 million individually or $50 million in the case of all transactions collectively;
(vii) except as specifically contemplated in Section 5.1(b) shall not, and shall not permit any of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions its Subsidiaries to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ixA) except in the ordinary course of business consistent with past practice, enter intoabandon, renewdisclaim, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior dedicate to the date hereof would public, sell, assign or grant any security interest in, to or under any material Intellectual Property or material Company IP Agreement, including failing to use commercially reasonable efforts (x) to perform or cause to be a performed any applicable filings, recordings and other acts, or (y) to pay or cause to be paid any required fees and Taxes, to maintain and protect its interest in any material Intellectual Property or material Company Material Contract or IP Agreement, (B) subject to Section 5.3, disclose any Contracts not in the ordinary courseconfidential information or confidential Intellectual Property to any person, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as other than employees of the date hereofCompany or its Subsidiaries that are subject to a confidentiality or non-disclosure covenant protecting against further disclosure thereof, or (AC) increase in any manner the compensation or benefits fail to notify Parent and Merger Sub promptly of any employeesinfringement, officers, directors, consultants misappropriation or independent contractors other violation of or conflict with any material Intellectual Property owned or used by the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course Subsidiaries of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of which the Company or any of its Subsidiaries, Subsidiaries becomes aware and to consult with Parent and Merger Sub regarding the actions (if any) to take to protect such Intellectual Property except with respect to officers, directors and consultants in the ordinary course of business consistent with past practicebusiness;
(viii) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws or similar applicable charter documents;
(Cix) accelerate except for transactions among the vesting Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the lapsing Company or any Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of forfeiture restrictions capital stock, ownership interest or conditions with respect to, convertible or exchangeable securities or take any equity or equity-based awards, action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (D) establish or cause except as otherwise provided by the funding express terms of any “rabbi trust” or similar arrangementunexercisable options outstanding on the date hereof), other than (EA) establish, adopt, amend or terminate issuances of Company Common Stock in respect of any arrangement that would be a exercise of Company Benefit Plan if in effect Stock Options and vesting and/or settlement of Company Stock-Based Awards outstanding on the date hereof or as may be granted after the date hereof in compliance with Section 5.1(a)(iii) or (Fx), (B) enter intoissuances of Company Common Stock pursuant to the Company’s dividend reinvestment plan and (C) the grant of Company Stock-Based Awards as permitted pursuant to clause (x) of this Section 5.1(a);
(x) shall not, amend, alter, adopt, implement or otherwise make any commitment to do and shall not permit any of its Subsidiaries to, grant, confer or award any compensatory warrants, options, convertible security or other rights to acquire any shares of its capital stock or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the foregoingexpress terms of any unexercisable options outstanding on the date hereof);
(xi) except in for transactions among the ordinary course Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of business consistent with past practiceits Subsidiaries to, waivedirectly or indirectly, releasepurchase, assign, settle redeem or compromise otherwise acquire any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment shares of monetary damages not in excess of $1,000,000 its capital stock or any obligation rights, warrants or liability options to acquire any such shares except for acquisitions of Company Common Stock tendered by holders of Company Stock Options and Company Stock-Based Awards in order to satisfy obligations to pay the Company in excess of such amountexercise price and/or tax withholding obligations with respect thereto;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries to, incur, assume, guarantee, prepay or its current otherwise become liable for any indebtedness for borrowed money (directly, contingently or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidationotherwise), dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practicepractice and except for (A) any indebtedness for borrowed money among the Company and its Subsidiaries and joint ventures or among the Company’s Subsidiaries and joint ventures, enter into (B) up to $750 million in aggregate principal amount of indebtedness for borrowed money under commercially reasonable credit facilities or in the commercial paper market incurred to replace, renew, extend, refinance or refund any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate existing short-term indebtedness for borrowed money; (C) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company; or, which indebtedness is incurred in compliance with this Section 5.1(a), and (D) indebtedness for borrowed money not to exceed $250 million in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with subclauses (A) - (C), inclusive;
(xiii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Liens which in the aggregate do not materially affect the continued use of the property for the purposes for which the property is currently being used ) or otherwise dispose of any portion of its properties or assets, including the capital stock of Subsidiaries, other than in the ordinary course of business and except (A) pursuant to existing agreements in effect prior to the execution of this Agreement, (B) in the case of Liens, as required in connection with any indebtedness permitted to be incurred pursuant to clause (xi) hereof, (C) for transactions involving less than $20 million individually, or $50 million in the aggregate or (D) as may be required in compliance with Section 5.6;
(xiv) except in the ordinary course of business and except as otherwise permitted by this Section 5.1(a), shall not, and shall not permit any of its Subsidiaries to, (A) amend or modify in any material respect adverse to the Company any of the Company Material Contracts contemplated by subclauses (i), (ii), (iii) and (v) of Section 3.19(a) or (B) consent to the termination of any Company Material Contract, in each case, if adverse to the Company in any material respect other than in the ordinary course of business;
(xv) shall not, and shall not permit any of its Subsidiaries to: (A) settle any Action relating to the Merger, this Agreement or the transactions completed hereby, or (B) settle any other Action, other than for monetary damages payable by the Company or any Subsidiary not in excess of $10 million individually or $50 million in the aggregate or (C) commence any material Action other than in the ordinary course of business without reasonably consulting with Parent prior to such commencement or other than any action against Parent or Merger Sub arising out of or relating to the Merger, this Agreement or the transactions contemplated hereby;
(xvi) shall not, and shall not permit any of its Subsidiaries to, (A) exercise any rights of renewal pursuant to the terms of any of the leases or subleases related to any Leased Real Property which by their terms would otherwise expire, except in the ordinary course of business and on reasonably available market terms or (B) sell, transfer, lease, sublease, license, mortgage, encumber or otherwise dispose of any Real Property (including leasehold interests), except for Real Property with a fair market value of less than $20 million;
(xvii) shall not, and shall not permit any of its Subsidiaries to, fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;
(xviii) shall not, and shall not permit any of its Subsidiaries to, authorize, or make any commitment with respect to, or make any capital expenditures in excess of $575 million, in the aggregate, for the Company and the Subsidiaries taken as a whole;
(xix) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b)foregoing actions; providedand
(xx) except in the ordinary course of business, that nothing in this Section 5.1(b) will preclude the fiduciaries shall not, and shall not permit any of its Subsidiaries to, make or change any Tax election, settle or compromise any Tax liability of the 401(k) Plan from purchasingCompany or any of its Subsidiaries, make any change in Tax Accounting methods, file any amended Tax Return, enter into any closing agreement with respect to any Tax or selling or otherwise disposing ofsurrender any right to claim a Tax refund, Common Shares in each case, if such action is reasonably likely to result in an increase to a Tax liability, which increase is material to the open market in connection with administering the common stock fund being maintained in connection with said 401(k) PlanCompany and its Subsidiaries.
(cb) For purposes Parent covenants and agrees with the Company, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, Parent:
(i) shall use its reasonable best efforts to consummate the transactions contemplated by this Agreement and shall take all action necessary to ensure that as of the Closing Date, Parent and Merger Sub will obtain the Financing; and
(ii) shall not, and shall not permit any of its Subsidiaries to, take or agree to take any action, including, without limitation, to enter into or agree to enter into a letter of intent, agreement in principle or definitive agreement for the acquisition of any business or person, that is reasonably likely to prevent, impair its ability to complete or materially delay the satisfaction of the conditions to the Merger set forth in Section 6.1 of this Section 5.1 and Agreement or the definition consummation of Company Material Adverse Effectthe transactions contemplated hereby, including the consent of any Officer Shareholder will be deemed the consent of ParentFinancing.
Appears in 2 contracts
Samples: Merger Agreement (Rohm & Haas Co), Merger Agreement (Dow Chemical Co /De/)
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), the Company will(iii) as may be required, and will cause each of its Subsidiaries to permitted or expressly contemplated by this Agreement or (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (iiv) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, the Company agrees with Parent that (iiA) the business of the Company and its Subsidiaries shall be conducted in, and such entities shall not take any action except in, the ordinary course of business in a manner generally consistent with past practice, and the Company shall use its reasonable best efforts (with the reasonable cooperation of Parent and Merger Sub and their Affiliates) to (1) preserve intact its and its Subsidiaries’ present business organization and capital structure; (2) maintain in effect all material Permits that are required for the Company or its Subsidiaries to carry on their respective businesses; (3) keep available the services of present officers and employees (as Parent may consent in writing a group), provided that it would not cause the Company to incur any material additional cost; and (4) maintain the current relationships with its lenders, customers, suppliers and other Persons with which consentthe Company or its Subsidiaries have significant business relationships; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any matter referred to in items provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(v)b) The Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date of this Agreement and the Effective Time or the Termination Date, without the prior written consent of Parent (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, which consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) makeshall not authorize, declare or pay any dividend, dividends on or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of with respect to its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Optionswhether in cash, (B) the vesting of Company RSUs assets, stock or Company Performance Shares, granted under the Company Stock Plans and outstanding as other securities of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (CCompany) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares a dividend or distribution by a wholly owned Subsidiary of the Company to the Company in the ordinary course of business;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or another reclassify any of its capital stock or other equity securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity securities, except for any such transaction by a wholly owned SubsidiarySubsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) shall not, and shall not permit any of its Subsidiaries to, (A) hire additional employees, except hiring in the ordinary course of business, (B) except as required by existing written agreements, increase the compensation or other benefits payable or provided to the Company’s present or former directors, officers or employees, except in the ordinary course of business consistent with past practice in the compensation of employees of the Company who are not directors or officers of the Company, (C) except in the ordinary course of business, approve or enter into any employment, change of control, severance or retention agreement with any employee of the Company (except (1) to the extent necessary to attract a new employee to replace an agreement with a departing employee, (2) for employment agreements terminable on less than thirty (30) days’ notice without penalty or severance obligation or (3) for severance agreements entered into with employees (other than officers) in the ordinary course of business consistent with past practice in connection with terminations of employment), or (D) except as permitted pursuant to clause (C) above, establish, adopt, enter into, amend, terminate or waive any rights with respect to any (x) collective bargaining agreement or (y) any plan, trust, fund, policy or arrangement for the benefit of any current or former directors or officers or any of their beneficiaries, except in the case of clause (y) only, for such amendments as may be required to cause such plan, trust, fund, policy or arrangement to comply with Section 409A of the Code so as to avoid the imposition of additional tax with respect thereto);
(iv) shall not, and shall not permit any of its Subsidiaries to, change in any material respects any financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) purchaseshall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or bylaws or similar applicable charter documents;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to:
(A) issue, sell, transferpledge, mortgage, encumber or otherwise dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any properties shares of its capital stock or assets having a value in excess of $1,000,000 other ownership interest in the aggregate Company or any 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 Person (other than to a wholly owned Subsidiary)such shares of capital stock, ownership interest or convertible or exchangeable securities, other than encumbrances, acquisitions or dispositions pursuant to Contracts (1) issuances of a maximum of 10,360,201 shares of Company Common Stock in effect as respect of any exercise of Company Stock Options and settlement of any Company Stock-Based Awards in each case outstanding on the date of this Agreement or and as set forth on Section 5.1(b)(vi) of the Company Disclosure Schedule, (2) issuances of a maximum of 215,000 shares of Company Common Stock, to new hires in the ordinary course of business consistent with past practice, provided that such issuances will not be on terms that would require such transactions to be set forth in Section 3.8(d) of the Company Disclosure Schedule and (3) issuances of a maximum of 260,000 shares of Company Common Stock, on or before May 16, 2008, under the 2001 Employee Stock Purchase Plan;
(viB) take any action to cause to be exercisable any otherwise unexercisable Company Stock Options, or take any action to cause to become vested any otherwise unvested Restricted Stock or PARSUs (except to the extent such exercisability or vesting occurs automatically by the terms of the agreements relating to the Company Stock Options, Restricted Stock or PARSUs upon the consummation of the Merger, or as otherwise expressly provided by the terms of this Agreement); or
(C) amend any agreements relating to Company Stock Options, Restricted Stock or PARSUs, or adjust the number, kind or exercise price of shares subject to outstanding stock options under any existing stock option plan or subject to agreements relating to Restricted Stock or PARSUs (except as otherwise expressly provided by the terms of this Agreement).
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares, except for the repurchase or reacquisition of securities in connection with the termination of service of any employee, director or consultant of the Company or any Subsidiary and in connection with net issuances related to Company Stock Options, Restricted Stock or PARSUs;
(viii) shall not acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or acquire any material amount of assets (other than (A) any License of Intellectual Property to the Company and the Subsidiaries that is not material to the business of the Company and the Subsidiaries, taken as a whole, as currently conducted and (B) acquisitions of inventory and supplies that are in the ordinary course of business);
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with liable for, modify in any material respect to the terms of, any indebtedness for borrowed money or offerbecome responsible for the obligations of any person (directly, place contingently or arrange any issue of debt securitiesotherwise), other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected except for (A) any intercompany indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) indebtedness for borrowed money incurred to delayreplace, adversely affect renew, extend, refinance or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in refund any existing indebtedness for borrowed money set forth on Section 5.1(b5.1(b)(ix) of the Company Disclosure ScheduleSchedule without increasing the amount of such permitted borrowings or incurring breakage costs, make any investment (C) guarantees by the Company of indebtedness or borrowed money of the Company, which indebtedness for borrowed money is incurred in excess of $5,000,000 in the aggregatecompliance with this Section 5.1(b)(ix), whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
and (viiiD) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions indebtedness for borrowed money incurred pursuant to Contracts the terms of agreements in effect prior to the execution of this Agreement, including amounts available but not borrowed as of the date of this Agreement, to the extent such agreements are set forth on Section 3.24 of the Company Disclosure Schedule;
(ixx) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall cause its Subsidiaries not to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets, license or otherwise), any material portion of its or its Subsidiaries’ properties or assets, including the capital stock of Subsidiaries, other than in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate practice and other than (A) pursuant to existing agreements in effect prior to the execution of this Agreement or (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated by this Agreement;
(xi) shall not permit any material Company Registered Intellectual Property to lapse or to be abandoned, dedicated, or disclaimed, fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in each and every material Company Registered Intellectual Property;
(xii) shall not, and shall not permit any of its Subsidiaries to modify, amend, terminate or waive any rights under any Company Material Contract, or any Contract or Contract which if entered into prior to the date hereof that would be a Company Material Contract or if in effect on the date of this Agreement, in any material respect in a manner which is adverse to the Company;
(Bxiii) shall not, and shall not permit any of its Subsidiaries to, enter into any Company Material Contracts not other than in the ordinary coursecourse of business; and
(xiv) shall not, involving and shall not permit any of its Subsidiaries to, enter into, amend, waive or terminate (other than terminations in accordance with their terms) any Affiliate Transaction, other than continuing any Affiliate Transactions in existence on the commitment or transfer date of value in excess of $1,000,000 in the aggregate in any yearthis Agreement;
(xxv) except to the extent required by Law or shall not, and shall not permit any Company Benefit Plan in effect as of the date hereofits Subsidiaries to, (A) increase make any material amendment in any manner the compensation Tax Return with respect to any material Tax, make or benefits of change any employeesmaterial Tax election, officers, directors, consultants settle or independent contractors compromise any material Tax liability of the Company or any of its Subsidiaries, except for increases in base salary in agree to an extension of the ordinary course statute of business consistent limitations with past practice, (B) pay any severance respect to the assessment or retirement benefits to any employees, directors, consultants or independent contractors determination of material Taxes of the Company or any of its Subsidiaries, except enter into any closing agreement with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, any material Tax or the lapsing of forfeiture restrictions or conditions with respect to, surrender any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be right to claim a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoingmaterial Tax refund;
(xixvi) except in the ordinary course of business consistent with past practiceshall not, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages and shall not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) its Subsidiaries to, adopt or enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company, or any of its Subsidiaries (other than the Merger);
(xvixvii) implement shall not, and shall not permit any of its Subsidiaries to, write up, write down or adopt write off the book value of any assets that are, individually or in the aggregate, material change in to the Company and its Tax or financial accounting principlesSubsidiaries, practices or methodstaken as a whole, other than (A) in the ordinary course of business or (B) as may be required by GAAP or applicable Law;
(xviixviii) shall not, and shall not permit any of its Subsidiaries to, pay, discharge, waive, settle or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practiceor (B) any claim, enter into liability or obligation not in excess of $50,000 individually, excluding any newamounts which may be paid under the Company’s or its Subsidiaries’ insurance policies;
(xix) shall not commence or settle, pay or discharge, any material litigation, investigation, arbitration, or materially amend other proceeding or otherwise materially alter other claim except in the ordinary course not in excess of $150,000 individually;
(xx) shall not authorize any current, agreement or obligations with capital expenditure in any Affiliate manner not reflected in the capital budget of the CompanyCompany attached as Section 5.1(b)(xx) of the Company Disclosure Schedule in excess of $50,000 in any instance; or
(xixxxi) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, or announce an intention, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of itself and its Subsidiaries and affiliates, that, between the date of this Section 5.1 Agreement and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect.
(d) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the consent 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 any Officer Shareholder will be deemed Parent and the consent Company shall exercise, consistent with the terms and conditions of Parentthis Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
Appears in 2 contracts
Samples: Agreement and Plan of Merger (Wj Communications Inc), Merger Agreement (Triquint Semiconductor Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed in Section 5.1(a) with the prior written consent of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as expressly contemplated or permitted by this Agreement or (iv) as disclosed in Section 5.1(a)of the Company Disclosure Schedule, the Company willshall, and will shall cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, employees and (C) take no action which that would materially and adversely affect or delay the ability of any of the Parties to obtain parties hereto from obtaining any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions transactions contemplated hereby, performing its covenants and agreements under this Agreement or consummating the transactions contemplated hereby or otherwise materially delay or prohibit consummation of the TransactionsMerger or other transactions contemplated hereby; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 5.1 shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except as (i) as may be required by applicable Law, (ii) set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) Schedule or (iii) as otherwise expressly required or specifically contemplated by this Agreement, the Company will shall not, and will cause each shall not permit any of its Subsidiaries to, without the prior written consent of Parent (which shall not to:be unreasonably withheld, delayed or conditioned):
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock stock; provided, however, that no wholly owned Subsidiary shall be prohibited hereunder from (A) paying any dividend, or making any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for other distribution, on any shares of its capital stock, except (A) for dividends paid stock held by the Company or any direct or indirect other wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with directly or indirectly redeeming, purchasing or otherwise acquiring any shares of its capital stock held by the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock PlansCompany;
(iii) grant any Person any right to acquire issue, deliver, pledge or encumber any shares of its capital stockstock or other equity interests, or rights, warrants or options to acquire, any such shares of capital stock or other equity interests, or grant any person any right to any of the foregoing;
(iv) issue any shares except as is both in the ordinary course of capital stock except pursuant business consistent with past practice and as would not reasonably be expected to (A) delay, adversely affect or impede the exercise of Company Stock OptionsMerger, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 500,000 in the aggregate to any Person person (other than to a wholly owned Subsidiary); provided, however, that no wholly owned Subsidiary shall be prohibited hereunder from transferring any of its properties or assets to the Company or any other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practicewholly owned Subsidiary;
(viv) incur, assume, guarantee, prepay prepay, or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, both in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability the Merger in any material respect; provided, however, that no wholly owned Subsidiary shall be prohibited hereunder from repaying any indebtedness for borrowed money owing by it to obtain the FinancingCompany or any other wholly owned Subsidiary or making any loans or advances to the Company or any other wholly owned Subsidiary;
(viivi) except as specifically contemplated is both in Section 5.1(b) the ordinary course of business consistent with past practice and as would not reasonably be expected to delay, adversely affect or impede the Company Disclosure ScheduleMerger in any material respect, make any investment in excess of $5,000,000 500,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, property transfers to, or purchase of any property or assets of any other Personperson other than a wholly owned Subsidiary of the Company or any wholly owned Subsidiary thereof or as permitted under Section 5.1(b)(v) above;
(viiivii) make any acquisition of another Person or business, whether by purchase of stock or securities or securities, contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreementor property transfers;
(ixviii) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which that if entered into prior to the date hereof would be a Company Material Contract Contract, or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 500,000 in the aggregate in any yearyear or $1 million over the term of the Contract;
(xix) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employeesdirectors, officers, directorsemployees, consultants or consultants, independent contractors or other service providers of the Company or any of its Subsidiaries, except for immaterial increases payable to employees, consultants, independent contractors or other service providers (in base salary each case that are not Affiliates of any directors or officers of the Company or its Subsidiaries) in the ordinary course of business consistent with past practicepractice (including, for this purpose, the normal employee salary, bonus and equity compensation review process conducted each year), (B) pay any pension, severance or retirement benefits to any directors, officers, employees, directorsconsultants, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practiceother service providers, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity incentive compensation or equity-based awards, (D) establish or cause the funding of any “rabbi trust” trust or similar arrangement, (ED) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (FE) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xix) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of 100,000 in the Company in excess of such amountaggregate;
(xiixi) amend or waive any provision of the Charter Documentsits certificate of incorporation or its bylaws or other equivalent organizational documents;
(xiiixii) take any action that is intended or would reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect (or in any respect in the case of representations and warranties qualified by Company Material Adverse Effect) at any time prior to the Effective Time, or in any of the conditions to the Merger set forth in Article VI not being satisfiedsatisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
(xivxiii) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, Corporation or its Subsidiaries or its current or future Affiliates following the Effective TimeTime or that would in any way restrict the businesses of Parent or its Affiliates or take any action that may impose any new or additional regulatory requirement on any Affiliate of Parent;
(xvxiv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvixv) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as consistent with or as may be required by GAAP GAAP, Law or applicable Lawregulatory guidelines;
(xviixvi) (A) make, change or revoke any material Tax election, (B) change any material method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, dispute or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviiixvii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xixxviii) agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Hallwood Group Inc), Merger Agreement (Hallwood Trust /Tx/)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time date on which a majority of the Company’s directors are designees of Parent or Merger Sub or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, with the prior written consent of Parent, (iii) as expressly contemplated, required or permitted by this Agreement or (iv) as set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)Letter, the Company will, shall and will shall cause each of its Subsidiaries to (Ax) conduct its business in all material respects in the ordinary course consistent with past practice, practice and (By) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality of the foregoing, between Between the date hereof and the Effective Timedate on which a majority of the Company’s directors are designees of Parent or Merger Sub, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned Letter or delayed) or (iii) as otherwise expressly contemplated or expressly permitted by this Agreement, without the Company will and will cause each prior written consent of its Subsidiaries not toParent, the Company:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) shall not make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises or similar transactions pursuant to the exercise of stock options or other awards issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right Plans or permitted hereunder to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, be granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of after the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of ; provided that the Company may continue to pay regular quarterly cash dividends on the Shares consistent with past practice (not to exceed $0.05 per share per quarter) and this Section 5.1(b)(i) shall not apply to dividends or distributions paid in cash by Subsidiaries to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or Subsidiaries in the ordinary course of business consistent with past practice;
(ii) shall not, and shall not permit any of its Subsidiaries to, adjust, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, 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) shall not, and shall not permit any of its Subsidiaries to, make any material change (or file any such change) in any method of Tax accounting or make any material change in any Tax election (except, in each case, as in the ordinary course of business or as is consistent with past practice); settle or compromise any material Tax liability for an amount materially in excess of the amount reserved therefor on the financial statements included in the Company SEC Documents, or enter into any closing agreement relating to Taxes for an amount materially in excess of the amount reserved therefor on the financial statements included in the Company SEC Documents;
(iv) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to the Company’s directors or executive officers except for increases to executive officers in the ordinary course of business consistent with past practice that become effective no earlier than July 1, 2007 and only in the event the Effective Time does not occur prior to such date, (B) enter into any employment, change in control, severance or retention agreement with any employee of the Company or (C) establish, adopt, enter into or amend any collective bargaining agreement, or Company Benefit Plan, except to the extent required to comply with Section 409A of the Code or as may be immaterial;
(v) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its officers, directors, employees, agents or consultants (other than loans or advances in the ordinary course of business consistent with past practice, including without limitation stock loans made under the Company’s Stock/Loan Plan to the extent approved for fiscal 2007 on June 26, 2006 by the Compensation Committee and the Board of Directors) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons, except as required by the terms of any Company Benefit Plan;
(vi) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vii) shall not, and shall not permit any of its material Subsidiaries to, amend or waive any provision of its certificate of incorporation or by-laws or similar applicable charter documents or in the case of the Company, enter into any agreement with any of its stockholders in their capacity as such;
(viii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable Company Stock Option under any existing Company Stock Option Plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of Shares in respect of any exercise of Company Stock Options and settlement of any Performance Shares outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b), (B) the grant of equity compensation awards in the ordinary course of business consistent with past practice under the Company’s 2004 Amended and Restated Equity Incentive Compensation Plan in accordance with the Long-Term Incentive Compensation Program and Regular Stock/Loan and Restricted Stock Grant Program approved for fiscal 2007 on June 26, 2006 by the Compensation Committee and the Board of Directors, and (C) the acquisition of Shares from a holder of a Company Stock Option, Restricted Shares or Performance Shares in satisfaction of withholding obligations or in payment of the exercise price;
(ix) except for transactions in the ordinary course of business consistent with past practice, among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its material Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(x) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offer, place or arrange any issue of debt securitiesotherwise), other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries and (B) indebtedness for borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement not reasonably be expected to delayexceed $10 million in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries; provided that no such indebtedness shall contain covenants that materially restrict the Offer, adversely affect the Merger or impede Parent’s ability to obtain that are materially inconsistent with the FinancingFinancing Commitments in effect as of the date hereof;
(viixi) except as specifically contemplated in Section 5.1(b) of for transactions among the Company Disclosure Scheduleand its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets (excluding sales of finished goods inventories in the ordinary course of business), including the capital stock of Subsidiaries;
(xii) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Specified Contract in any material respect in a manner which is adverse to the Company other than in the ordinary course of business or enter into any Company Specified Contract other than in the ordinary course of business and other than in response to an unexpected disruption in supply;
(xiii) shall not make any capital expenditures having an aggregate value in excess of (i) with respect to the Company’s fiscal year ending June 30, 2007, together with the amount of capital expenditures made by the Company through the date hereof, $42 million and (ii) with respect to the Company’s fiscal quarter ending September 30, 2007, $10 million;
(xiv) shall not make any investment in excess of $5,000,000 500,000 in the aggregate, whether by purchase of stock or securities ofsecurities, contributions to capital tocapital, property transfers, or purchase of entering into binding agreements with respect to any property such investment or assets of any other Personacquisition;
(viiixv) shall not make any acquisition of another Person or businessbusiness in excess of $500,000 in the aggregate, whether by purchase of stock or securities or securities, contributions to capital in excess of $5,000,000 in the aggregatecapital, other than acquisitions pursuant property transfers, or entering into binding agreements with respect to Contracts in effect as of the date of this Agreementany such investment or acquisition;
(ixxvi) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts shall not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 500,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any obligation claims, liabilities or liability of the Company obligations in excess of such amount, in each case, other than in the ordinary course consistent with past practice;
(xiixvii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI shall not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000reorganization;
(xviii) shall not take any material action with respect to any affiliate of the Company (other than in any wholly owned Subsidiaries of the Company) that is outside the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or;
(xix) shall not agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); providedand
(xx) shall not, that nothing and shall not permit any of its Subsidiaries to, agree, in this Section 5.1(b) will preclude the fiduciaries writing or otherwise, to take any of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries and affiliates, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Agreement and Plan of Merger (Elkcorp), Agreement and Plan of Merger (CGEA Investor, Inc.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to until the Effective Time date on which a majority of the Company’s directors are designees of Parent or Merger Sub or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.18.1 (the “Termination Date”), and except (i) as may be required by applicable Law or Law, (ii) as may be agreed in writing by Parent (the decision with respect to which shall not be unreasonably delayed), (iii) as expressly required by this Agreement or as permitted by Section 5.1(b), (iiiv) as disclosed set forth in Section 5.1(a) 6.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, covenants and will cause each of its Subsidiaries to (A) conduct its agrees with Parent that the business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, shall be conducted in the ordinary course of business consistent with past practice (provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 6.1(b) (except for actions addressed under clause (i), (ii), (iii), (ix), (xi), (xiii)(C), (xix), (xxi) or (xxii) of Section 6.1(b)) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision consistent with past practice and would 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, employees and business associates.
(b) Subject to the exceptions contained in clauses (i) through (iv) of Section 6.1(a), the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the date on which a majority of the Company’s directors are designees of Parent or Merger Sub, without the prior written consent of Parent (the decision with respect to which shall not reasonably be expected unreasonably delayed), the Company:
(i) shall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to delayits outstanding shares of capital stock (whether in cash, adversely affect assets, stock or impede Parent’s ability to obtain other securities of the FinancingCompany or its Subsidiaries), except dividends and distributions paid or made on a pro rata basis by its Subsidiaries;
(viiii) shall not, and shall not permit any of its Subsidiaries to, merge or consolidate with any other person, except as specifically contemplated for any such transactions among wholly owned Subsidiaries of the Company, or restructure, reorganize or completely or partially liquidate;
(iii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in Section 5.1(b) respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company Disclosure Schedulewhich remains a wholly owned Subsidiary after consummation of such transaction;
(iv) shall not, make and shall not permit any investment of its Subsidiaries to, 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 $5,000,000 1 million in the aggregate, whether by purchase any transaction or series of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregaterelated transactions, other than acquisitions pursuant to Contracts in effect as of the date of this AgreementAgreement and set forth on the Company Disclosure Schedule;
(ixv) except as required by existing written agreements or Company Benefit Plans in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into effect prior to the date hereof would be a Company Material Contract or (B) any Contracts not of this Agreement and listed in the ordinary courseCompany Disclosure Schedule, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent as otherwise required by Law or applicable Law, shall not, and shall not permit any Company Benefit Plan in effect as of the date hereof, its Subsidiaries to (A) increase in any manner the compensation or other benefits of payable or provided to any employees, officersconsultants, directors, consultants current or independent contractors former directors or officers of the Company or any of its Subsidiaries, except except, with respect to employees only, for increases in base salary in the ordinary course of business consistent with past practice, (B) pay enter into any new employment, change of control, severance or retirement benefits to retention agreement with any employeesemployee, directors, consultants current or independent contractors former director or officer of the Company or any of its Subsidiaries, Subsidiaries (except (1) with respect to officersemployees only, directors for severance agreements as required pursuant to existing written agreements or Company Benefit Plans in effect prior to the date of this Agreement and consultants listed in the Company Disclosure Schedule, or as otherwise required by applicable Law or entered into in the ordinary course of business consistent with past practice), or (2) a retention pool as described in Section 5.1(b)(v) of the Company Disclosure Schedule to be allocated by the Chief Executive Officer of the Company to employees of the Company and its Subsidiaries in consultation with Parent), (C) accelerate establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the vesting ofbenefit of any current or former directors, officers or employees or any of their beneficiaries, except as would not result in a material increase in cost to the lapsing Company or as is required to comply with Section 409A of forfeiture restrictions or conditions with respect tothe Code, (D) grant any equity or equity-based awardsawards that may be settled in Shares, (D) establish preferred shares or cause any other securities of the funding 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 “rabbi trust” Shares, preferred shares or similar arrangementother Company securities or Subsidiary securities, other than grants of equity or equity-based awards permitted under Section 6.1(b)(x)(C), (E) establishaccelerate the vesting or payment of any compensation payable or benefits to become payable or provided to any employees, adoptconsultants, amend current or terminate former directors or officers of the Company or any arrangement that would be a Company Benefit Plan if in effect on the date hereof of its Subsidiaries or (F) enter intoterminate or materially amend any existing, amendor adopt any new, alterCompany Benefit Plan, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except other than changes made in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise practice that do not materially increase the costs of any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the such Company in excess of such amountBenefit Plan;
(xiivi) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) its Subsidiaries to, enter into or make any “non-compete” loans, advances or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries capital contributions to or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change investments in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) makeofficers, change directors, employees, agents or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxesconsultants, in the case of each this clause (A) other than advances of (C) expenses in the ordinary course of business consistent with past practice or (DB) any other person (other than the Company or any direct or indirect wholly owned Subsidiary) in excess of $1,000,000500,000 in the aggregate, in the case of this clause (B) other than loans, advances, capital contributions or investments made pursuant to Contracts to the extent in effect as of the date hereof set forth in the Company Disclosure Schedule;
(xviiivii) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, or revalue any of its material assets (including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business consistent with past practice), except as required by, or to conform to, GAAP, SEC rule or policy or applicable Law;
(viii) shall not, and shall not permit any of its Subsidiaries to, settle any litigation or other proceedings before a Governmental Entity or otherwise for an amount in excess of $100,000, individually, or $1,000,000 in the aggregate, other than settlements of Tax proceedings not in excess of amounts reserved; provided that, with respect to settlements or fines concerning any Action of any Governmental Entity arising out of or relating to the Restatement and Related Matters the maximum amount shall be the amount set forth in Section 6.1(b)(viii) of the Company Disclosure Letter and such settlements (x) shall not be reasonably likely to have any adverse impact (relative to the alternative of not settling) on the operations of the Company or any of its Subsidiaries and (y) may exceed the amount set forth in Section 6.1(b)(viii) of the Company Disclosure Letter with the consent of Parent, such consent not to be withheld unreasonably (from the perspective of a future owner of a majority of the equity of the Company);
(ix) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws or similar applicable charter documents;
(x) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize or propose the issuance, sale, pledge, disposition, grant or encumbrance of, any shares of its capital stock or other ownership interests in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable Company Stock Option under any existing Company Stock Option Plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of Shares in respect of any exercise of Company Stock Options and settlement of any Restricted Shares outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 6.1(b), (B) the acquisition of Shares from a holder of a Company Stock Option or Company Restricted Shares in satisfaction of withholding obligations or in payment of the exercise price, and (C) the grant of equity compensation awards to new hires and promoted employees in the ordinary course of business consistent with past practice in accordance with the Company’s option granting policy as described in Section 6.1(b)(x) of the Company Disclosure Schedule in an aggregate amount not to exceed 100,000 Shares in the aggregate in any calendar quarter;
(xi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries shall not, and shall not permit any of its material Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(xii) shall not, and shall not permit any of its Subsidiaries to, waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under any Company Stock Plans or authorize cash payments in exchange for any options grand under any Company Stock Plans;
(xiii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise) except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 6.1(b), and (C) indebtedness for borrowed money not to exceed $500,000 in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with clauses (A) or (B), inclusive;
(xiv) make or authorize capital expenditures in excess of 110% of the budgeted capital expenditure amount set forth in Section 6.1(b)(xiv) of the Company Disclosure Letter, which expenditures shall be consistent in timing with past practice, except in exigent circumstances;
(xv) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including pursuant to a sale-leaseback transaction or securitization), or subject to any material Lien (other than Permitted Liens) or otherwise dispose of any of its material properties or assets, including the capital stock of Subsidiaries, except (A) pursuant to existing Contract in effect prior to the execution of this Agreement, (B) in the ordinary course of business consistent with past practice, or (C) pursuant to a Permitted Contract;
(xvi) shall not, and shall not permit any of its Subsidiaries to sell, transfer, lease, license, mortgage, encumber or otherwise dispose of (including pursuant to a sale-leaseback transaction or securitization) any Company IP to any person, except pursuant to a Permitted Contract;
(xvii) shall not, and shall not permit any of its Subsidiaries to, enter into any newContract that would have been a Company Material Contract had it been entered into prior to the execution of this Agreement, except for Contracts with customers entered into in the ordinary course of business on terms and conditions consistent with past practice (and, for the purpose of clarity, exclusivity provisions, non-competition provisions, provisions that limit the ability of the Company or materially amend any of its Subsidiaries to own, operate, sell, transfer, pledge or otherwise materially alter dispose of any currentmaterial amount of assets or business and similar restrictive provisions shall not be deemed to be in the ordinary course or business or consistent with past practice) (any such new or existing Contract to be known as a “Permitted Contract”);
(xviii) shall not, agreement and shall not permit any of its Subsidiaries to modify, amend, terminate or obligations with waive any Affiliate material rights under any Company Material Contract, except for the modification, amendment, termination or waiver of the Company; orany Permitted Contract;
(xix) agree shall not, and shall not permit any of its Subsidiaries to, enter into, amend or extend any material collective bargaining agreement or other labor agreement;
(xx) shall not, and shall not permit any of its Subsidiaries to, cancel or fail to renew, without reasonable substitutes, any material insurance policy naming the Company or any of its Subsidiaries as a beneficiary or loss payee;
(xxi) shall not, and shall not permit any of its Subsidiaries to, take any action to render inapplicable, or make to exempt any commitment third party from, any standstill arrangements or the provisions of any Takeover Law;
(xxii) shall not, and shall not permit any of its Subsidiaries to, change its cash management policies, including accelerating the collection of accounts receivable or deferring the payment of accounts payable; and
(xxiii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Safenet Inc), Merger Agreement (Stealth Acquisition Corp.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to of this Agreement until the earliest of (i) the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) the termination of this Agreement in accordance with its terms, except as disclosed required or otherwise expressly permitted or contemplated by this Agreement, as set forth in Section 5.1(a) 6.01 of the Company Disclosure Schedule, Schedule or (iii) as otherwise consented to by with the prior written consent of Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), the Company willshall, and will shall cause each of its Subsidiaries to (A) to, conduct its business in all material respects in the ordinary course consistent with past practicepractice and shall use its reasonable best efforts to (i) preserve intact the assets, including manufacturing facilities, and business organization of the Company and its Subsidiaries, (Bii) use commercially reasonable efforts to maintain preserve the current beneficial relationships of the Company and preserve intact its Subsidiaries with any Persons (including suppliers, partners, contractors, distributors, sales representatives, customers, licensors and licensees) with which the Company or any of its Subsidiaries has material business organization and advantageous business relationships and to relations, (iii) retain the services of its key the present officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) employees of the Company Disclosure Scheduleand its Subsidiaries, (iiiv) as Parent may consent comply in writing (which consent, all material respects with respect to any matter referred to in items all applicable Laws and the requirements of all Company Material Contracts and (v), (vii), (viii), (ix), (x), (xi), (xviii) keep in full force and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid effect all material insurance policies maintained by the Company on and its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary)Subsidiaries, other than encumbrances, acquisitions or dispositions pursuant changes to Contracts in effect as of the date of this Agreement or such policies made in the ordinary course of business consistent with past practice;.
(vib) incurFrom the date of this Agreement until the earliest of (i) the Effective Time or (ii) the termination of this Agreement in accordance with its terms, assumeexcept as required or otherwise expressly permitted or contemplated by this Agreement, guarantee, prepay as set forth in Section 6.01 of Parent Disclosure Schedule or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any the prior written consent of the foregoing that is pursuant to working capital borrowings Company (which consent shall not be unreasonably withheld, delayed or letter conditioned), Parent shall, and shall cause each of credit issuances under existing credit facilitiesits Subsidiaries to, in each case, conduct its business in the ordinary course of business consistent with past practice and would not reasonably be expected shall use its reasonable best efforts to delay(i) preserve intact the assets, adversely affect including manufacturing facilities, and business organization of Parent and its Subsidiaries, (ii) preserve the current beneficial relationships of Parent and its Subsidiaries with any Persons (including suppliers, partners, contractors, distributors, sales representatives, customers, licensors and licensees) with which Parent or impede Parent’s ability to obtain any of its Subsidiaries has material business relations, (iii) retain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) services of the Company Disclosure Schedulepresent officers and key employees of Parent and its Subsidiaries, make any investment (iv) comply in excess all material respects with all applicable Laws and the requirements of $5,000,000 all Parent Material Contracts and (v) keep in the aggregate, whether full force and effect all material insurance policies maintained by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregateParent and its Subsidiaries, other than acquisitions pursuant changes to Contracts in effect as of the date of this Agreement;
(ix) except such policies made in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (TTM Technologies Inc), Merger Agreement (Viasystems Group Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time Date or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedulewriting by Parent, or (iii) as otherwise consented to may be contemplated or required by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)this Agreement, the Company willcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in such entities shall not take any action except in, the ordinary course of business consistent with past practicepractice and, (B) to the extent consistent therewith, the Company and its Subsidiaries shall use commercially reasonable efforts to maintain and (i) preserve intact its their current business organization and advantageous (ii) preserve their relationships with customers, suppliers and others having business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.dealings with them;
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective TimeDate, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementParent, the Company will not, and will cause each not permit any of its Subsidiaries not to:
(i) adjustamend its articles or certificate of incorporation, splitbylaws, combine partnership or reclassify any capital stock joint venture agreements or otherwise amend other organizational documents (except to the terms of extent required to comply with applicable Law or its capital stockobligations hereunder);
(ii) makecombine or reclassify any shares of its capital stock or declare, declare set aside or pay any dividenddividend or other distribution or redemption (whether in cash, stock or property or any combination thereof) in respect of its capital stock, or make redeem or otherwise acquire any other distribution onof its securities or any securities of its respective Subsidiaries;
(iii) reclassify, combine, split, subdivide or directly or indirectly redeem, purchase or otherwise acquire acquire, directly or indirectly, any of its capital stock, stock options or debt securities;
(iv) except as required by Company Benefit Plans, (A) (1) increase the compensation or other benefits payable or provided to directors or executive officers of the Company or, (2) except in the ordinary course of business consistent with past practice, increase the compensation or other benefits payable or provided to employees who are not directors or executive officers of the Company, (B) enter into any employment, change of control, severance or retention agreement with any employee of the Company or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or 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, except as would not result in a material increase in cost to the Company;
(v) change any of its financial accounting policies or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vi) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement) other than (A) for dividends paid by issuances of shares of Company Common Stock in respect of any direct or indirect wholly owned Subsidiary to the exercise of Company or to any other direct or indirect wholly owned SubsidiaryStock Options, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises sale of shares of Company Common Stock pursuant to the exercise of stock options issued and outstanding as to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of the date hereof under the Company Stock PlansTaxes;
(iiivii) grant any Person any right to directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stockstock or any rights, warrants or options to acquire any such shares;
(ivviii) issue incur, assume, guarantee, prepay or otherwise become liable for any shares indebtedness for borrowed money (directly, contingently or otherwise), except for indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money on materially no less favorable terms.
(ix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than the Company Permitted Liens) or otherwise dispose of any properties or assets, including any capital stock of Subsidiaries, except pursuant in the ordinary course of business consistent with past practice or as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby, subject to the limitations of Section 5.5(b);
(x) alter, modify, amend, terminate, waive any rights or exercise any option under any Company Material Contract in any material respect in a manner which is adverse to the Company;
(xi) enter into any Company Material Contracts other than in the ordinary course of business consistent with past practice or enter into any collective bargaining agreement;
(A) the exercise of Company Stock Optionsmake, change or revoke any Tax election, (B) file any amended Tax Return, (C) settle or compromise any liability for Taxes or surrender any claim for a refund of Taxes, other than in the vesting case of Company RSUs clauses (B) and (C) hereof in respect of any Taxes that have been identified in the reserves for Taxes in the Company’s GAAP financial statements included in the Company’s SEC Documents, (D) change any accounting method, practice or Company Performance Sharespolicy in respect of Taxes except as required by applicable Law, granted under (E) prepare any Tax Returns in a manner which is not consistent in all material respects with the past practice of the Company Stock Plans and outstanding its Subsidiaries with respect to the treatment of items on such Tax Returns, or (F) incur any liability for Taxes other than in the ordinary course of business (including as a result of the operation of the business in the ordinary course);
(xiii) make any capital expenditure, financing or expenditures which (i) involves the purchase of real property or (ii) is in excess of $5,000 individually or $20,000 in the aggregate, other than capital expenditures pursuant to contracts entered into prior to the date hereof (all of which contracts are listed in Section 3.19 of the Company Disclosure Schedule);
(xiv) acquire, sell, lease or dispose of any assets outside the ordinary course of business;
(xv) acquire, directly or indirectly (A) by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other manner, any person or division, business or equity interest of any person or (B) except in the ordinary course of business consistent with past practice, any assets;
(xvi) make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or loan or advance (other than travel and similar advances to its employees in the ordinary course of business consistent with past practice) to, any person;
(xvii) pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in accordance with the terms of such instruments as of liabilities, claims or obligations reflected or reserved against in the date hereof, and most recent consolidated financial statements (Cor the notes thereto) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to included in the Company SEC Documents or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of incurred since the date of this Agreement or such financial statements in the ordinary course of business consistent with past practice;
(vixviii) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claimlitigation, action proceeding or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of investigation material to the Company in excess of such amountand its Subsidiaries taken as a whole;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xvxix) adopt a plan of complete or partial liquidation, liquidation or resolutions providing for or authorizing such liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or other reorganization reorganization, unless required by Law, administrative order or the terms of such entitythis transaction;
(xvixx) implement reduce the prices of products sold or adopt services performed for customers except in the ordinary course of business;
(xxi) modify in any material change in its Tax respects any current investment policies or financial accounting principlesinvestment practices, practices or methods, other than except as may be required by GAAP or to accommodate changes in applicable Law;
(xviixxii) (A) make, change enter into any transaction or revoke take any material Tax election, (B) change action or fail to take any method action which would result in any of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, the representations and warranties contained in the case of each of (C) or (D) in excess of $1,000,000this Agreement not being true and correct;
(xviiixxiii) take any action or permit any other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Companyaction to occur which might have a Company Material Adverse Effect; or
(xixxxiv) agree to take agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries, that, between the date hereof and the definition Effective Date, Parent shall not, and shall not permit any of Company its Subsidiaries to take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Cardionet Inc), Merger Agreement (Biotel Inc.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall will not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be contemplated by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Letter, the Company will, covenants and will cause each of its Subsidiaries to agrees with Parent that (A) conduct its the business in all material respects in of the Company and the Company Subsidiaries will be conducted in, and such entities will not take any action except in, the ordinary course consistent with past practiceof business, and (B) the Company and the Company Subsidiaries will use commercially reasonable efforts to maintain and preserve intact its their present business organization and advantageous business relationships organizations and to retain the services of its key officers preserve their relationships with significant customers, suppliers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, except (i) as may be required by applicable Law, (ii) as may be agreed in writing by Parent (which consent will not be unreasonably withheld, delayed or conditioned), (iii) as may be contemplated by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Letter, the Company agrees with Parent, on behalf of itself and the Company Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall consent will not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustwill not, and will not permit any of the Company Subsidiaries that is not wholly-owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid or made by its directly or indirectly wholly-owned Subsidiaries or as contemplated pursuant to Section 2.3(a);
(ii) will not, and will not permit any of the Company Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid any such transaction by any direct or indirect wholly a wholly-owned Subsidiary to of the Company or to any other direct or indirect wholly which remains a wholly-owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise Subsidiary after consummation of stock options issued and outstanding as of the date hereof under the Company Stock Planssuch transaction;
(iii) grant except (w) as set forth on Section 5.1(b)(iii) of the Company Disclosure Letter, (x) as required by existing written agreements or Company Benefit Plans, or (y) as otherwise required by applicable Law, will not and will not permit any Person Company Subsidiary to (A) increase the compensation or other benefits payable or provided to the Company’s directors, executive officers or management-level employees, except in the ordinary course of business with respect to only other employees, or (B) except with respect to any right administrative changes, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries, (C) enter into or amend any employment or severance agreements with any director or executive officer, except as described in Section 5.1(b)(iii) of the Company Disclosure Letter (D) establish any bonus or incentive plan (other than as allowed under Section 5.5 of this Agreement), (E) pay any pension or retirement allowance not allowed by any Company Benefit Plan or by applicable Law, (F) pay any bonus to acquire any shares of its capital stockdirector or executive officer, or (G) become a party to, amend or commit itself to, any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment agreement, except, in each case, as would not result in a material increase in cost to the Company;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereofwill not, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereofwill not permit any Company Subsidiaries to, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company enter into or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber make any loans or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate advances to any Person of its executive officers, directors, employees, agents or consultants (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions loans or dispositions pursuant to Contracts in effect as of the date of this Agreement or advances in the ordinary course of business consistent with past practice) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(v) will not, and will not permit any Company Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vi) will not adopt any amendments to its certificate of incorporation or by-laws or similar applicable charter documents;
(vii) except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, will not, and will not permit any Company Subsidiaries to,
(A) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any Company 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,
(B) issue any equity-based compensation awards, whether settled in stock, cash, or otherwise, other than (x) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options and settlement of any Company Stock-Based Awards (each as hereinafter defined) outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b),
(y) the sale of shares of Common Stock pursuant to the exercise of options to purchase Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes, or
(z) the grant of equity compensation awards as required by existing written agreements or Company Benefit Plans or set forth in Section 5.1(b)(vii)(B)(z) of the Company Disclosure Letter;
(viii) will not, and will not permit any Company Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of the Company’s capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of shares of Company Common Stock upon (1) the exercise of Company Stock Options using such shares for the payment of the exercise price or (2) the settlement of Company Stock-Based Awards or the exercise of Company Stock Options if shares of Company Common Stock are used to satisfy obligations with respect to withholding Taxes;
(ix) will not, and will not permit any Company Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offerotherwise), place except for (A) any indebtedness for borrowed money among the Company and its wholly-owned Subsidiaries or arrange among the Company’s wholly-owned Subsidiaries (B) short-term indebtedness for borrowed money incurred to refinance any issue existing short-term indebtedness for borrowed money, (C) guarantees by the Company of debt securitiesindebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 5.1(b), (D) drawings under credit facilities in effect prior to the execution of this Agreement and (E) indebtedness for borrowed money not to exceed $10 million in aggregate principal amount outstanding at any time incurred by the Company or any Company Subsidiaries other than in accordance with clauses (A) through (D), inclusive;
(x) except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, will not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Company Permitted Liens) or otherwise dispose of any material portion of its properties or assets, including the capital stock of Subsidiaries, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected except (A) pursuant to delay, adversely affect or impede Parent’s ability existing agreements in effect prior to obtain the Financing;
(vii) except as specifically contemplated execution of this Agreement set forth in Section 5.1(b5.1(b)(x) of the Company Disclosure Schedule, make Schedule or (B) as may be required by applicable Law or any investment Governmental Entity in excess of $5,000,000 in order to permit or facilitate the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as consummation of the date of transactions contemplated by this Agreement;
(ixxi) except will not, and will not permit any Company Subsidiaries to, modify, amend, terminate or waive any rights under any Company Material Contract agreement in any material respect in a manner which is adverse to the Company other than in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any yearbusiness;
(xxii) except to the extent required by Law or will not, and will not permit any Company Benefit Plan Subsidiaries to compromise, settle or agree to settle any Action in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of which damages are being sought against the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceedingSubsidiary, other than waivers, releases, assignmentscompromises, settlements or compromises agreements that (A) involve only the payment of monetary damages not in excess of $1,000,000 5,000,000 individually or $10,000,000 in the aggregate and (B) do not involve any imposition of adverse equitable relief on, or any obligation admission of wrongdoing or, in the context of any actual or liability potential violation of any criminal Law, any nolo contendere or similar plea by, the Company or any Company Subsidiaries; or (C) compromise, settle or agree to settle any Action arising out of the matters of Section 5.1(b)(xii) of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter DocumentsDisclosure Letter;
(xiii) take will not, and will not permit any action that is intended or would reasonably be expected Company Subsidiary to result in make any acquisition (including by merger) of the conditions capital stock or a material portion of the assets of any other Person for consideration in excess of $10,000,000 individually, or $20,000,000 in the aggregate, except pursuant to Contracts in force on the Merger date of this Agreement and set forth in Article VI not being satisfiedon Section 5.2(b)(xiii) of the Company Disclosure Letter;
(xiv) enter into will not and will not permit any “non-compete” or similar agreement Company Subsidiary to make capital expenditures that would materially restrict are not contemplated by the businesses capital expenditure budget set forth in Section 5.2(b)(xiv) of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective TimeCompany Disclosure Letter;
(xv) will not and will not permit any Company Subsidiary to, enter into any new line of business that is material to the Company and the Company Subsidiaries, taken as a whole, or materially change any of its technology policies that are material to the Company and the Company Subsidiaries, taken as a whole, except in the ordinary course of business or as required by applicable Law;
(xvi) will not and will not permit any Company Subsidiary to, except as required by applicable Law, make or change any Tax election, change any material Tax accounting period, adopt or change any Tax accounting method, amend any material Tax Return, enter into any material closing agreement, settle any material Tax claim or assessment relating to the Company or any of the Company Subsidiaries, surrender any right to claim a refund of material Taxes, or consent to any extension or waiver of the limitation period applicable to any material Tax claim or material assessment relating to the Company or any of the Company Subsidiaries, in each case that could reasonably be expected to materially increase Taxes (or materially decrease a Tax benefit) of the Company and Company Subsidiaries after the Closing;
(xvii) will not and will not permit any Company Subsidiary to, adopt or recommend a plan of complete or partial dissolution, liquidation, dissolutionrecapitalization, merger, consolidation, restructuring, recapitalization restructuring or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000reorganization;
(xviii) other than will not and will not permit any Company Subsidiary to, allow any material foreign or U.S. registrations to lapse in connection with any Company Intellectual Property;
(xix) will not and will not permit any Company Subsidiary to, except as required by Law, enter into or amend in any material respect any collective bargaining agreement;
(xx) will not and will not permit any Company Subsidiary to, outside of the ordinary course of business consistent business, enter into or renew any raw material supply Contract that is (i) inconsistent with past practice, enter into (ii) has a term greater than two years and (iii) provides for annual payments by the Company or any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the CompanyCompany Subsidiary greater than $20,000,000; or
(xixxxi) agree to take will not, and will not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Eastman Chemical Co), Agreement and Plan of Merger (TAMINCO Corp)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to of this Agreement until the earlier of the Effective Time or and the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.16.1 (the “Termination Date”), and except (i) as may be required by applicable Law or Law, (ii) as expressly may be agreed in writing by Parent, (iii) as required by this Agreement or (iv) as permitted by set forth in Section 5.1(b4.1 of the Company Disclosure Schedule, the Company shall, and shall cause each Subsidiary to, conduct its business in the usual, regular and ordinary course consistent with past practice and use all reasonable efforts to preserve intact its current business organization, keep available the services of its and their current officers and employees and maintain their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them.
(b) Subject to the exceptions contained in clauses (i) through (iv) of Section 4.1(a), but without limiting the generality of Section 4.1(a), the Company covenants and agrees with Parent, on behalf of itself and its Subsidiaries, that between the date of this Agreement and the earlier of the Effective Time and the Termination Date, the Company:
(i) shall not declare, set aside or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except (i) dividends and distributions paid or made to the Company by Subsidiaries and (ii) as set forth in Section 4.1(b)(i) of the Company Disclosure Schedule;
(ii) shall not, and shall not permit any of its Subsidiaries to, (i) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction, or (ii) purchase, redeem or otherwise acquire any shares of the capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;
(iii) except as set forth in Section 4.1(b)(iii) of the Company Disclosure Schedule, as required by a Company Benefit Plan or an existing agreement disclosed in Section 5.1(a2.8(a)(x) of the Company Disclosure Schedule, or (iii) as otherwise consented to required by Parent with respect to clauses applicable Law (A) including Section 409A of the Code), shall not, and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each permit any of its Subsidiaries to (A) conduct its business in all material respects in increase the ordinary course consistent with past practicecompensation or other benefits payable or provided to the Company’s directors or officers, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain enter into or amend any employment, change of control, severance or retention agreement with any officer of the services of its key officers and key employeesCompany, and (C) take no action which would materially and adversely affect establish, adopt, enter into or delay amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the ability benefit of any current or former directors, officers or employees or any of their beneficiaries, or (D) hire or terminate any employees outside the Parties to obtain ordinary course of business;
(iv) shall not, and shall not permit any necessary approvals of its Subsidiaries to, change financial accounting policies or procedures or any regulatory agency of its methods of reporting income, deductions or other Governmental Entity items for financial accounting purposes, except as required for the Transactions by GAAP, SEC rule or otherwise materially delay policy or prohibit the Transactions.applicable Law;
(bv) Without limiting the generality shall not, and shall not permit any of the foregoingits Subsidiaries to, between the date hereof and the Effective Time, adopt any amendments to its certificate of incorporation or bylaws or similar applicable charter documents;
(vi) except (i) as set forth in Section 5.1(b4.1(b)(vi) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consentshall not, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each permit any of its Subsidiaries not to:
(i) adjust, splitissue, combine sell, pledge, dispose of or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividendencumber, or make any other distribution onauthorize the issuance, sale, pledge, disposition or directly or indirectly redeem, purchase or otherwise acquire or encumberencumbrance of, any shares of its capital stock or other ownership interest in the Company or any Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date of this Agreement), other than (A) for dividends paid by issuances of shares of Company Common Stock in respect of any direct or indirect wholly owned Subsidiary to exercise of Company Stock Options outstanding on the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing date of this Agreement and (B) in connection with the cashless exercises sale of shares of Company Common Stock pursuant to the exercise of stock options issued and outstanding as to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of the date hereof under the Company Stock PlansTaxes;
(iiivii) grant except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries and except in the ordinary course of business consistent with past practice, shall not, and shall not permit any Person any right to of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stockstock or any rights, warrants or options to acquire any such shares;
(ivviii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), issue or sell any shares debt securities or warrants or other rights to acquire any debt securities of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as or any of its Subsidiaries, 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 date hereof and foregoing;
(ix) except as set forth in accordance with the terms of such instruments as Section 4.1(b)(ix) of the date hereof, Company Disclosure Schedule or for transactions among the Company and (C) its wholly owned Subsidiaries or among the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchaseSubsidiaries, shall not sell, lease, license, transfer, mortgageexchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets having a value in excess assets, including the capital stock of $1,000,000 in the aggregate to any Person Subsidiaries, except (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions A) pursuant to Contracts existing agreements in effect as of prior to the date execution of this Agreement or (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby;
(x) shall not, and shall not permit any of its Subsidiaries to, acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial equity interest in or portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (B) any assets that are material, individually or in the aggregate, to the Company and the Subsidiaries, taken as a whole;
(xi) except as set forth in Section 4.1(b)(xi) of the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries to, waive, release, assign, settle or compromise any material litigation other than settlements of, or compromises for, any litigation where the amounts paid or to be paid are covered by insurance coverage maintained by the Company;
(xii) shall not, and shall not permit any of its Subsidiaries to, enter into any settlement, conciliation or similar agreement with any Governmental Entity or that requires payment of any material consideration after the execution date of this Agreement;
(xiii) except as set forth in Section 4.1(b)(xiii) of the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Material Contract in any material respect in a manner which is adverse to the Company;
(xiv) shall not, and shall not permit any of its Subsidiaries to, enter into any Company Material Contracts other than in the ordinary course of business consistent with past practice;
(vixv) incurexcept as set forth in Section 4.1(b)(xv) of the Company Disclosure Schedule, assumeshall not, guaranteeand shall not permit any of its Subsidiaries to, prepay make any capital expenditure or become obligated commitments with respect to thereto in excess of $100,000 individually or $500,000 in the aggregate;
(xvi) shall not, and shall not permit any indebtedness for borrowed money of its Subsidiaries to, pay, discharge or offersatisfy any claims, place liabilities or arrange any issue of debt securitiesobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than any of the foregoing that is pursuant to working capital borrowings payment, discharge or letter of credit issuances under existing credit facilities, in each casesatisfaction, in the ordinary course of business consistent or in accordance with past practice and would not reasonably be expected to delaytheir terms, adversely affect of liabilities reflected or impede Parent’s ability to obtain reserved against in the Financing;
most recent consolidated financial statements (vii) except as specifically contemplated in Section 5.1(bor the notes thereto) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 included in the aggregate, whether by purchase of stock Company SEC Documents that were publicly available on or securities of, contributions prior to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except Agreement or incurred in the ordinary course of business business;
(xvii) shall not make or change any Tax election not consistent with past practice, file any amended Tax Return, enter into, renew, extend, amend or terminate (A) into any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assignclosing agreement, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected proceeding with respect to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax electionclaim or assessment relating to the Company, (B) surrender any right to claim a refund of material Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company, or change an annual accounting period, adopt or change any accounting method of reporting for (including any Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;accounting method); and
(xviii) other than shall not, and shall not permit any of its Subsidiaries to, agree, in the ordinary course of business consistent with past practicewriting or otherwise, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Merisel Inc /De/), Merger Agreement (American Capital Strategies LTD)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the earlier of the Effective Time or and the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except except, in each case with respect to any of the provisions set forth in this Section 5.1, (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of writing by Parent and the Company Disclosure Schedule, or after seeking consent from the other party (iii) as otherwise consented such consent not to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(a) of the Company willDisclosure Letter or Section 5.1(b) of the Parent Disclosure Letter, as applicable:
(a) The Company covenants and will cause each agrees with Parent that the business of the Company and its Subsidiaries to (A) conduct its business shall be conducted, in all material respects respects, in the ordinary course of business, consistent with past practice, (B) ; and the Company for itself and on behalf of its Subsidiaries agrees with Parent to use commercially reasonable efforts to maintain and preserve intact its their business organization organizations, business and advantageous business governmental relationships and goodwill, and to retain keep available the services of its key their present officers and key employees, except in each case to the extent reasonably necessary to achieve the targets set forth in the financial plan of the Company and (Cits Subsidiaries for fiscal years 2016 and 2017 set forth in Section 5.1(a) take of the Company Disclosure Letter; provided, however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 5.1(a) shall be deemed a breach of this sentence unless such action would materially constitute a breach of such other provision. The Company covenants and adversely affect or delay agrees with Parent that it will use commercially reasonable efforts to take, and cause its Subsidiaries to take, the ability of any actions set forth on Section 5.1(a) of the Parties Company Disclosure Letter prior to obtain any necessary approvals the Closing Date. The Company agrees with Parent, on behalf of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) the Company shall not, and shall not permit any Subsidiary of the Company Disclosure Scheduleto, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to do any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not tofollowing:
(i) adjust(A) change the Company’s current dividend policy of $0.05 per share in cash per quarter, splitor declare, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare set aside or pay any dividenddividends on, or make any other distribution ondistributions (whether in cash, stock or directly property or indirectly redeem, purchase or otherwise acquire or encumberany combination thereof) in respect of, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except other equity interests or voting securities, other than:
(A1) for regular quarterly cash dividends paid payable by any the Company in respect of shares of Company Common Stock of $0.05 per share of Company Common Stock, with usual declaration, record and payment dates, subject to Section 5.16; and
(2) dividends and distributions by a direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly wholly-owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such parent entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Windstream Holdings, Inc.), Merger Agreement (EarthLink Holdings Corp.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to until the earlier of the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law Law, (ii) with the prior written consent of Parent (such consent not to be unreasonably conditioned, withheld or delayed), (iii) as may be expressly required by this Agreement or as permitted by Section 5.1(b), (iiiv) as disclosed set forth in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company willshall, and will shall cause each of its Subsidiaries to, use commercially reasonable efforts to (A) conduct the business of the Company and its business Subsidiaries in all material respects in the ordinary course consistent with past practiceof business, (B) use commercially reasonable efforts to preserve intact their present lines of business, maintain their rights, franchises and Company Permits and preserve intact its business organization their relationships with customers and advantageous business relationships and to retain the services of its key officers and key employeessuppliers; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, between that from the date hereof and prior to the earlier of the Effective TimeTime and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Company or any of its Subsidiaries, (ii) as may be consented to by Parent (such consent not to be unreasonably conditioned, withheld or delayed), (iii) as may be expressly contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(b) of the Company Disclosure Schedule, the Company:
(iiA) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheldamend or restate any Company Organizational Document, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each shall not permit any of its Subsidiaries not to:to amend or restate their respective articles of incorporation, code of regulations, certificate of incorporation, certificate of formation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or organizational documents;
(iB) adjustshall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(C) shall not, and shall not permit any of its Subsidiaries that is not wholly owned by the Company or wholly owned Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends or distributions by any Subsidiaries only to the Company or another to any wholly owned SubsidiarySubsidiary of the Company;
(vD) purchaseshall not, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would shall not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or permit any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect Subsidiaries to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization reorganization, other than in connection with the Merger and other than any mergers, consolidations, restructurings or reorganizations solely among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, or take any action with respect to any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of such entitythe Merger;
(xviE) implement shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or adopt business or make any loans, advances or capital contributions to, or investments in, any other person with a value in excess of $10,000,000 in the aggregate, except (1) as contemplated by the Company 2015 Budget (whether or not such acquisition, loan, advance, capital contribution or investment is made during the 2015 fiscal year), (2) in the ordinary course of business consistent with past practices or (3) as made in connection with any transaction among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries; provided, however, that the Company shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Merger;
(F) shall not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, or otherwise dispose of or encumber any properties or assets with a value in excess of $10,000,000 in the aggregate, except (1) sales, transfers and dispositions of inventory and products in the ordinary course of business consistent with past practices or that are otherwise de minimis or (2) sales, leases, transfers or other dispositions made in connection with any transaction among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries;
(G) shall not, and shall not permit any of its Subsidiaries to, authorize any capital expenditures in excess of $5,000,000 in the aggregate, except for expenditures contemplated by the Company 2015 Budget (whether or not such capital expenditure is made during the 2015 fiscal year);
(H) shall not, and shall not permit any of its Subsidiaries to, modify, amend or terminate, or waive any material change rights under any Company Material Contract, or enter into any new Contract which would be a Company Material Contract, in each case other than in the ordinary course of business consistent with past practices;
(I) except as required by applicable Law or the terms of any Company Benefit Plan existing and as in effect on the date of this Agreement, shall not, and shall not permit any of its Tax Subsidiaries to, (1) establish, adopt, amend, modify, commence participation in or financial accounting principlesterminate (or commit to establish, practices adopt, amend, modify, commence participation in or methodsterminate) any Company Benefit Plan (or arrangement that would be a Company Benefit Plan following such action), (2) increase in any manner the compensation, severance or benefits of any of the current or former directors, officers, employees, consultants, independent contractors or other service providers of the Company or its Subsidiaries, (3) pay or award, or commit to pay or award, any bonuses or incentive compensation , (4) accelerate any rights or benefits, or, other than in the ordinary course of business and consistent with past practice, make any determinations or interpretations with respect to any Company Benefit Plan, (5) fund any rabbi trust or similar arrangement, (6) grant or amend any equity awards, (7) change any actuarial assumptions used to calculate funding obligations with respect to any Company 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 applicable Law, or (8) hire or terminate the employment or services of (other than for cause) any officer, employee, independent contractor or consultant who has target annual compensation (i.e., base salary and target annual bonus opportunity) greater than $150,000;
(xviiJ) (A) makeshall not, and shall not permit any of its Subsidiaries to, materially change or revoke any material Tax electionaccounting policies or procedures or any of its methods of reporting income, deductions or other material items, except as required by GAAP, SEC rule or policy or applicable Law;
(K) shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing Company Benefit Plans (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable or unexercised options or warrants outstanding on the date hereof), other than (1) issuances of shares of Company Common Stock in respect of the exercise or settlement of any Company Stock Awards outstanding on the date hereof, (B2) change any method the sale of reporting shares of Company Common Stock pursuant to the exercise of Company Options if necessary to effectuate an option direction upon exercise or for Tax purposes, (C) settle or compromise any material Tax claim, audit or disputewithholding of Taxes, or (D3) make for transactions among the Company and its wholly owned Subsidiaries or surrender among the Company’s wholly owned Subsidiaries;
(L) shall not, and shall not permit any claim of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of the capital stock of any of them or any rights, warrants or options to acquire any such shares, except for a material transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries or in connection with the net exercise of any options, or the netting of any restricted stock for tax withholding purposes, issued in the ordinary course of business consistent with past practices;
(M) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee or otherwise become liable for any indebtedness for borrowed money or any guarantee of such indebtedness, except (1) for any indebtedness incurred in the ordinary course of business consistent with past practices (including in connection with the issuance of letters of credit and the entry into capitalized leases), (2) for any indebtedness among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (3) for any indebtedness incurred to replace, renew, extend, refinance or refund any existing indebtedness on substantially the same or more favorable terms to the Company than such existing indebtedness, (4) for any guarantees by the Company of Taxesindebtedness of Subsidiaries of the Company or guarantees by the Company’s Subsidiaries of indebtedness of the Company or any Subsidiary of the Company, which indebtedness is incurred in compliance with this Section 5.1(b) and (5) with respect to any indebtedness not in accordance with the preceding clauses (1) through (4), for any indebtedness not to exceed $10,000,000 in aggregate principal amount outstanding at the time incurred by the Company or any of its Subsidiaries; provided, however, that in the case of each of the preceding clauses (C1) through (5) such indebtedness does not impose or (D) result in excess any additional restrictions or limitations that would be material to the Company and its Subsidiaries, or, following the Closing, Parent and its Subsidiaries, other than any obligation to make payments on such indebtedness and other than any restrictions or limitations to which the Company or any Subsidiary is currently subject under the terms of $1,000,000any indebtedness outstanding as of the date hereof;
(xviiiN) shall not, and shall not permit any of its Subsidiaries to, waive, release, assign, settle or compromise any material claim, action or proceeding, other than as set forth on Section 5.1(b)(N) of the Company Disclosure Schedule and that do not involve any admission of wrongdoing or equitable relief that imposes any restrictions on the operations of the Company or its Affiliates;
(O) other than in the ordinary course of business consistent with past practice, shall not make, change or revoke any material Tax election, change any material tax accounting method, file any material amended Tax return, enter into any newclosing agreement, request any material Tax ruling, settle or compromise any material Tax proceeding, or materially amend surrender any claim for a material refund of Taxes;
(P) except as otherwise permitted by this Agreement or for transactions between the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries or in the ordinary course of business consistent with past practices, shall not, and shall not permit any of its Subsidiaries, to prepay, redeem, repurchase, defease, cancel or otherwise materially alter acquire any current, agreement material indebtedness or obligations with any Affiliate guarantees thereof of the CompanyCompany or any Subsidiary, other than (1) at stated maturity and (2) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to which holders of such indebtedness or guarantees thereof may be entitled), in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof; orand
(xixQ) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the foregoing actions that are prohibited by pursuant to clauses (A) through (P) of this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries, that from the date hereof and prior to the earlier of the Effective Time and the definition Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to the Parent or any of its Subsidiaries, (ii) as may be consented to by the Company (such consent not to be unreasonably conditioned, withheld or delayed), (iii) as may be expressly required by this Agreement, or (iv) as set forth in Section 5.1(c) of the Parent Disclosure Schedule, Parent shall not:
(A) amend or propose to Parent’s shareholders any amendment to Parent’s or Merger Sub’s certificate of incorporation or bylaws in any manner that would be reasonably expected to prevent, materially delay or materially impair the ability of Parent or Merger Sub to consummate the Merger or otherwise be adverse to the Company or the holders of Company Material Adverse EffectCommon Stock;
(B) declare, set aside or pay any extraordinary dividend or other extraordinary distribution payable in cash, stock or property in respect of the consent of any Officer Shareholder will be deemed the consent capital stock of Parent, or subdivide, reclassify, recapitalize, split, combine or exchange or enter into any similar transaction with respect to any of the capital stock of Parent in a manner that would disproportionately adversely affect a holder of Company Common Stock relative to a holder of Parent Common Stock or, to the extent such action would reasonably be expected to prevent, materially delay or materially impair the ability of Parent or Merger Sub to consummate the Merger, purchase, redeem or otherwise acquire any share of Parent’s capital stock or other securities or issue any shares of Parent capital stock or other securities;
(C) acquire (by purchase, merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, exchange offer, recapitalization, reorganization, share exchange, business combination or similar transaction) any business or material amount of assets from any other person if such acquisition would reasonably be expected to prevent, materially delay or materially impair the ability of Parent or Merger Sub to consummate the Merger; or
(D) agree or permit any of its Subsidiaries to agree, in writing or otherwise, to take any of the foregoing actions.
Appears in 2 contracts
Samples: Merger Agreement (Alcoa Inc.), Merger Agreement (Rti International Metals Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed); (iii) as may be expressly required or expressly permitted by this Agreement or (iv) as set forth in Section 5.1(a) of the Company Disclosure ScheduleLetter, or the Company covenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in the ordinary course of business consistent with past practice and the Company shall use all commercially reasonable efforts to (iiiA) preserve intact its current business organization, (B) maintain in effect all of its material Company Permits and material Environmental Permits, (C) keep available the services of its current directors, officers and key employees, (D) maintain satisfactory relationships with its material customers, lenders and suppliers, and others having material business relationships with it and (E) maintain in effect the material insurance policies of the Company and its Subsidiaries as otherwise consented in effect on the date hereof in the ordinary course of business consistent with past practice.
(b) Subject to by the exceptions contained in clauses (i) through (iv) of Section 5.1(a), the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, without the prior written consent of Parent (such consent, with respect to clauses (A) and (B) below (which consent shall Section 5.1(b)(xvii), not to be unreasonably withheld, conditioned or delayed), the Company willCompany:
(i) shall not, and will cause each shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), other than (A) regular quarterly cash dividends or distributions authorized prior to the date hereof or after the date hereof in the ordinary course of business consistent with past practice, not exceeding $0.06 per Share per dividend, as appropriately adjusted in the event of any stock split, reverse stock split, stock dividend, reclassification or similar transaction or (B) dividends and distributions paid by Subsidiaries of the Company to the Company or to any of its wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, 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) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) conduct increase the compensation or other benefits payable or provided to its business in all material respects (1) employees (excluding directors and executive officers of the Company), other than in the ordinary course of business consistent with past practice or (2) directors or executive officers, (B) enter into any employment, change of control, severance or retention agreement with any employee or other service provider of the Company or any of its Subsidiaries (it being understood that the Company and its Subsidiaries may enter into offer letters with new hires in the ordinary course of business so long as such letters do not provide severance or change-in-control benefits), (C) establish, adopt, enter into or amend any plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries, except as would not result in an increase in cost to the Company or any of its Subsidiaries or an acceleration or increase in payments or benefits and except as otherwise permitted pursuant to clauses (A) and (B) of this Section 5.1(b)(iii), or (D) enter into any pre-closing retention arrangements other than those set forth in Section 5.1(b)(iii) of the Company Disclosure Letter;
(iv) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans, advances or capital contributions to, or investments in, any other Person (other than loans or advances in the ordinary course of business consistent with past practice) or make any change in its existing borrowing, lending or investment arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries to, change material financial accounting policies or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vi) shall not (A) amend any provision of its certificate of incorporation or bylaws or similar applicable charter or organizational documents or (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services permit any of its key officers and key employees, and (C) take no action which Subsidiaries to amend any provision of such Subsidiary’s certificate of incorporation or bylaws or similar applicable charter or organizational documents in a manner adverse to Parent or Merger Sub or as would have a Company Material Adverse Effect or prevent or materially and adversely affect impair or delay the ability of any of the Parties Company to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for consummate the Transactions or otherwise materially delay or prohibit the Transactions.Merger;
(bvii) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of for transactions exclusively among the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of its wholly owned Subsidiaries or among the foregoing enumerated items) belowCompany’s wholly owned Subsidiaries, shall not, and shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each permit any of its Subsidiaries not to:
(i) adjust, splitissue, combine sell, pledge, dispose of or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividendencumber, or make any other distribution onauthorize the issuance, sale, pledge, disposition or directly or indirectly redeem, purchase or otherwise acquire or encumberencumbrance of, any shares of its capital stock or other ownership interest in the Company or any Subsidiaries of the Company or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities, take any action to cause to be exercisable any otherwise unexercisable Company Option (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options or awards outstanding on the date hereof) or otherwise make any changes (Aby combination, merger, consolidation, reorganization, liquidation, split, combination, reclassification, adjustment or otherwise) for dividends paid by any direct or indirect wholly owned Subsidiary to in the capital structure of the Company or to any other direct of its Subsidiaries or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by amend the terms of any securities of the Company on or any of its Subsidiaries, other than issuances of shares of Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) Stock in connection with the cashless exercises pursuant to the respect of any exercise of stock options issued and Company Options outstanding as of on the date hereof under the Company Stock Planshereof;
(iiiviii) grant except for transactions exclusively among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any Person any right to of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stockstock or any rights, warrants or options to acquire any such shares, other than the acquisition of shares of Common Stock from a holder of a Company Option in satisfaction of withholding obligations or in payment of the exercise price or from a holder of Restricted Shares in satisfaction of withholding obligations upon the vesting of such shares;
(ivix) issue shall not, and shall not permit any shares of capital stock its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), except pursuant to for (A) any indebtedness for borrowed money among the exercise of Company Stock Optionsand its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) the vesting of Company RSUs or Company Performance Shares, granted under guarantees by the Company Stock Plans and outstanding as of indebtedness for borrowed money of Subsidiaries of the date hereof and Company, which indebtedness is incurred in accordance compliance with the terms of such instruments as of the date hereof, this Section 5.1(b)(ix) and (C) indebtedness for borrowed money pursuant to the Existing Credit Facilities;
(x) except for transactions exclusively among the Company and its wholly owned Subsidiaries or among the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereofwholly owned Subsidiaries, shall not, and other than the issuance shall not permit any of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchaseits Subsidiaries to, sell, lease, license, transfer, mortgageexchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any portion of its tangible properties or assets having a value in excess of $1,000,000 500,000, individually or in the aggregate to any Person aggregate, except (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions A) pursuant to Contracts existing agreements in effect as of prior to the date execution of this Agreement or (B) for the sale of inventory in the ordinary course of business consistent with past practice;
(vixi) incurshall not, assumeand shall not permit any of its Subsidiaries to, guarantee(A) modify, prepay materially amend, terminate or become obligated grant any waiver under any Company Material Contract, any Lease or any contract that would constitute a Company Material Contract or a Lease if entered into prior to the date hereof (other than the expiration or renewal of any Company Material Contract or any Lease in accordance with respect to its terms), or (B) enter into any indebtedness for borrowed money contract described in Section 3.19(a)(i), Section 3.19(a)(ii), Section 3.19(a)(vii), Section 3.19(a)(viii), Section 3.19(a)(ix) or offer, place or arrange any issue of debt securitiesSection 3.19(a)(x), other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilitiesthan, in each casethe case of either clause (A) or clause (B), (1) in the ordinary course of business consistent with past practice and or (2) to enter into agreements providing for acquisitions that would not reasonably otherwise be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingpermitted under Section 5.1(b)(xii);
(viixii) except as specifically contemplated in Section 5.1(b) shall not, and shall not permit any of its Subsidiaries to, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the Company Disclosure Scheduleassets of any Person (or business or division thereof);
(xiii) shall not, and shall not permit any of its Subsidiaries to, make or agree to make any investment capital expenditure in excess of $5,000,000 in the aggregate, whether by purchase of stock 500,000 individually or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 1,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of contemplated by the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors capital expenditures budget of the Company or any of its Subsidiaries, except for increases set forth in base salary in the ordinary course of business consistent with past practice, (BSection 5.1(b)(xiii) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfiedDisclosure Letter;
(xiv) shall not, and shall not permit any of its Subsidiaries to, adopt or enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company or any of its Subsidiaries;
(xv) shall not, and shall not permit any of its Subsidiaries to, enter into any new line of business outside the businesses being conducted by the Company and its Subsidiaries on the date hereof and any reasonable extensions thereof;
(xvi) implement shall not, and shall not permit any of its Subsidiaries to, settle, or adopt offer or propose to settle, (A) any material change litigation, investigation, arbitration, proceeding or other claim involving or against the Company or any of its Subsidiaries (other than any of the foregoing that relates to Tax matters), (B) any stockholder litigation or dispute against the Company or any of its officers or directors or (C) any litigation, arbitration, proceeding or dispute that relates to the transactions contemplated hereby, in its Tax or financial accounting principles, practices or methodseach case, other than as may be required by GAAP settlements that involve the payment of monetary damages, in the aggregate, not in excess of the amount set forth in Section 5.1(b)(xvi) of the Company Disclosure Letter and without the imposition of equitable relief on, or applicable Lawthe admission of wrongdoing by, the Company, any of its Subsidiaries or any of its officers or directors;
(xvii) (A) makeshall not, and shall not permit any of its Subsidiaries to, make or change or revoke any material Tax election, (B) change any material annual Tax accounting period, adopt or change any material method of reporting Tax accounting, file any material amended Tax Returns or claims for material Tax purposesrefunds, (C) enter into any closing agreement with respect to a material amount of Taxes, settle or compromise any material Tax claim, audit or disputeassessment, or (D) make or surrender any right to claim for a material refund Tax refund, offset or other reduction in tax liability or consent to any extension or waiver of Taxes, in the case of each of (C) limitations period that could reasonably be expected to produce a material Tax claim or (D) in excess of $1,000,000;assessment; and
(xviii) other than shall not, and shall not permit any of its Subsidiaries to, agree, in the ordinary course of business consistent with past practicewriting or otherwise, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition Effective Time, Parent and Merger Sub shall not, and shall not permit any of Company their respective Subsidiaries or Affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 2 contracts
Samples: Merger Agreement (Metals Usa Holdings Corp.), Merger Agreement (Reliance Steel & Aluminum Co)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement the rules or as permitted by Section 5.1(b)regulations of the New York Stock Exchange, (ii) for any actions taken in good faith to respond to (A) Covid-19 and any Covid-19 Measures or (B) sanctions or similar restrictions imposed in connection with the current dispute between the Russian Federation and Ukraine, (iii) as disclosed may be consented to in writing by Parent, (iv) as required by this Agreement, or (v) as otherwise set forth in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)Letter, the Company willcovenants and agrees with Parent to use commercially reasonable efforts to, and will cause each of its Subsidiaries to (Ax) conduct the business of the Company and its business Subsidiaries, in all material respects respects, in the ordinary course consistent with past practiceof business, (By) use commercially reasonable efforts to maintain and preserve substantially intact its business organization and advantageous material business relationships and to retain the services of its key officers and key employees, and (Cz) take such actions or refrain from taking such actions as specified on Section 5.1(a)(z) of the Company Disclosure Letter; provided, however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any such provision of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the TransactionsSection 5.1(b).
(b) Without limiting Subject to the generality exceptions contained in any of the foregoingclauses (i), (iii), (iv) and (v) of Section 5.1(a), the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementTermination Date, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries to, declare, set aside, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid by wholly owned Subsidiaries of the Company to the Company or to any of the Company’s other wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, subdivide, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (Ai) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction and (ii) pursuant to the Company or another wholly owned Subsidiaryterms of the Existing Notes Indentures;
(viii) shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any Company Securities or Company Subsidiary Securities, except for (A) transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) pursuant to the terms of the Existing Notes Indentures, (C) the acquisition of Shares from a holder of a Company Stock Option or a Company Stock-Based Award in satisfaction of Tax withholding obligations or in payment of the exercise price of Company Stock Options outstanding on the date hereof or as may be granted after the date hereof to the extent permitted under Section 5.1(b)(iv)(C) or (D) pursuant to an exercise of the Capped Calls or otherwise pursuant to their terms;
(iv) shall not, and shall not permit any of its Subsidiaries to, issue, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than with Permitted Liens) or grant any shares of its capital stock or other equity or voting interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to a wholly owned Subsidiarysubscribe for any shares of its capital stock or other equity or voting interests, or any rights, warrants or options to purchase any shares of its capital stock or other Company Securities or Company Subsidiary Securities, except for any issuance, sale or grant: (A) of Company Common Stock as required pursuant to any exercise of Company Stock Options and required settlement of any Company Stock-Based Awards pursuant to the terms of such award outstanding on the date hereof or as may be granted after the date hereof to the extent permitted under Section 5.1(b)(iv)(C), other than encumbrances, acquisitions or dispositions (B) pursuant to Contracts in effect as the exercise of Company Stock Options outstanding on the date hereof or as may be granted after the date hereof to the extent permitted under Section 5.1(b)(iv)(C) if necessary to effectuate an optionee’s direction upon exercise or for withholding of this Agreement or Taxes, (C) the grant of equity compensation awards in the ordinary course of business consistent to employees at a level below Senior Vice President in connection with past practice;
(vi) incurnew hires, assume, guarantee, prepay promotions or become obligated performance reviews that complies with respect to any indebtedness for borrowed money or offer, place or arrange any issue the provisions of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure ScheduleLetter, make any investment in excess (D) pursuant to the terms of $5,000,000 in the aggregate, whether by purchase of stock Existing Notes Indentures or securities of, contributions to capital to, the Capped Calls and (E) solely between or purchase of any property or assets of any other Personamong the Company and/or Company’s wholly owned Subsidiaries;
(viiiv) make shall not, and shall not permit any acquisition of another Person or business, whether by purchase of stock or securities or contributions its Subsidiaries to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) hire any Company Material Contract individual or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) terminate any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors employee of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course Subsidiaries at a level at or above Senior Vice President or with total annual cash compensation of business consistent with past practice, more than $600,000 or (B) pay waive any severance or retirement benefits restrictive covenants applicable to any employeesemployees at a level at or above Senior Vice President;
(vi) shall not, directors, consultants or independent contractors of the Company or and shall not permit any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practiceSubsidiaries to, (Cx) accelerate the vesting ofadopt, enter into, engage in negotiations for, terminate or amend any Collective Bargaining Agreement other than as required by applicable Law or (y) except as required by any Collective Bargaining Agreement or Company Benefit Plan, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awardsas otherwise required by applicable Law, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (EA) establish, adopt, materially amend or terminate any material Company Benefit Plan or create or enter into any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Benefit Plan if it were in effect on existence as of the date hereof of this Agreement, (B) increase in any manner the compensation (including severance, change-in-control, transaction-based and retention compensation) or benefits of any current or former employee or independent contractor of the Company or its Subsidiaries, (C) pay or award, or commit to pay or award, any bonus or incentive, equity, or equity-based compensation, except to the extent permitted by Section 5.1(b)(iv)(C), or amend the timing, methodology or process for determining commissions or bonuses, (D) accelerate any rights or benefits under any Company Benefit Plan, (E) accelerate the time of vesting or payment of any award under any Company Benefit Plan; or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment loan or advance of money or other property (or forgive or waive any such loan or advance) to do any current or former director, officer, employee or independent contractor of the foregoingCompany or its Subsidiaries (other than advances of expenses to employees in the ordinary course of business);
(xivii) shall not, and shall not permit any of its Subsidiaries to, change financial accounting methods, policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP or SEC rule or policy;
(viii) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws or applicable organizational documents other than immaterial amendments to applicable organizational documents of the Company’s wholly owned Subsidiaries;
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries; (B) guarantees by the Company or any of its Subsidiaries of indebtedness for borrowed money of the Company or any of its wholly owned Subsidiaries in existence on the date hereof, (C) indebtedness for borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement, including the Existing Notes, but excluding the issuance of new commercial paper, bonds, notes or similar instruments by the Company or any of its Subsidiaries; (D) the issuance of letters of credit in the ordinary course of business; and (E) indebtedness for borrowed money in an aggregate principal amount not to exceed $10 million, without taking into account any amounts permitted by clauses (A) through (D) of this Section 5.1(b)(ix);
(x) shall not, and shall not permit any of its Subsidiaries to, except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any of its properties or assets, including the capital stock of Subsidiaries, other than in transactions in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action involving less than $25 million in the aggregate (it being understood that the sale of capital stock of Subsidiaries is not permitted) or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only except pursuant to existing agreements in effect prior to the payment execution of monetary damages not in excess of $1,000,000 or any obligation or liability this Agreement and set forth on Section 5.1(b)(x) of the Company in excess of such amountDisclosure Letter;
(xiixi) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
to: (xvA) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization (other than this Agreement), or (B) acquire by merging or consolidating with, or by purchasing an equity interest in or a portion of such entitythe assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, or acquire any capital stock or material assets of any person, in each case, other than (x) in transactions involving less than $25 million in the aggregate, (y) pursuant to existing agreements in effect prior to the date of this Agreement and set forth on Section 5.1(b)(xi) of the Company Disclosure Letter or (z) purchases of inventory and supplies in the ordinary course of business or transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries (it being understood and agreed that nothing in this Section 5.1 shall prohibit the Company from forming new wholly owned Subsidiaries in the ordinary course of business);
(xvixii) implement shall not, and shall not permit any of its Subsidiaries to, modify or adopt amend in any material change in its Tax respect, terminate or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke waive any material Tax election, (B) change rights under any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for Company Material Contract in a material refund of Taxes, in manner which is adverse to the case of each of (C) or (D) in excess of $1,000,000;
(xviii) Company other than in the ordinary course of business consistent with past practiceor as otherwise expressly contemplated by this Section 5.1(b);
(xiii) shall not, and shall not permit any of its Subsidiaries to, enter into any newContract that (x) requires the payment by the Company or its Subsidiaries in an amount in excess of $5 million per year or (y) would be a Company Material Contract if entered into prior to the date hereof (other than in the ordinary course of business (including in connection with the expiration or renewal of any Company Material Contract) or as otherwise contemplated by this Section 5.1(b));
(xiv) shall not, and shall not permit any of its Subsidiaries to, except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned subsidiaries, make any loans, advances or capital contributions to, or materially amend or otherwise materially alter investments (including the purchase of marketable securities that cannot immediately be converted to cash without penalty) in, any current, agreement or other person in an aggregate principal amount greater than $25 million other than pursuant to existing contractual obligations with any Affiliate as of the Company; ordate of this Agreement and set forth on Section 5.1(b)(xiv) of the Company Disclosure Letter;
(xixxv) agree shall not, and shall not permit any of its Subsidiaries to, make, commit to take make or authorize any capital expenditure other than (A) as contemplated by the capital expenditure budget as set forth in Section 5.1(b)(xv) of the Company Disclosure Letter and (B) any unbudgeted capital expenditures not to exceed $5 million in the aggregate per annum;
(xvi) other than any Transaction Litigation (which shall be governed by Section 5.10), shall not, and shall not permit any of its Subsidiaries to, waive, enter into any settlement or other voluntary compromise of any pending or threatened Action against the Company or any of its Subsidiaries, that would involve (A) payment (or an obligation to make a payment) by the Company or any commitment of its Subsidiaries of more than $1 million individually or $2 million in the aggregate (net of insurance or indemnification coverage), (B) the settlement of any pending or threatened purported class or collective Action or that has been the subject of public reporting by media outlets, (C) the imposition of any equitable or injunctive relief against the Company or the making of any admissions of liability or responsibility or (D) any fine, penalty, or other sanction from any Governmental Entity;
(xvii) shall not, and shall not permit any of its Subsidiaries to, (A) make (other than in the ordinary course of business), change or revoke any material election with respect to Taxes, (B) change any annual Tax accounting period, (C) adopt or change any material method of Tax accounting, (D) amend any material Tax Return, (E) surrender (other than pursuant to the expiration of an applicable statute of limitations) any right to claim a material Tax refund (F) consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment (other than in the ordinary course of business) unless the Company provides reasonable advance written notice to Parent or (G) settle any material Tax claim or assessment for an amount materially in excess of any amount specifically accrued or reserved therefor in the Company’s financial statements; and
(xviii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or any of its Subsidiaries prior to the Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Section 5.1 Agreement, complete control and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parentsupervision over its and its Subsidiaries’ respective operations.
Appears in 1 contract
Samples: Merger Agreement (Zendesk, Inc.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, (iii) as may be contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by the Company covenants and agrees with Parent with respect to clauses (A) that the business of the Company and (B) below (which consent its Subsidiaries shall be conducted in, and such entities shall not be unreasonably withheldtake any action except in, conditioned or delayed)the ordinary course of business consistent with past practice and, to the extent consistent therewith, the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) shall use commercially reasonable efforts to maintain and (i) preserve intact its their current business organization and advantageous (ii) preserve their relationships with customers, suppliers and others having business relationships and to retain the services of its key officers and key employeesdealings with them; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting Subject to the generality exceptions contained in clauses (i) through (iv) of Section 5.1 (a), the foregoingCompany agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementParent, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries);
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another which remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(viii) purchaseexcept as required by Company Benefit Plans or Company Foreign Plans, sellshall not, transfer, mortgage, encumber and shall not permit any of its Subsidiaries to (A) (1) increase the compensation or otherwise dispose of any properties other benefits payable or assets having a value in excess of $1,000,000 in the aggregate provided to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions directors or dispositions pursuant to Contracts in effect as executive officers of the date of this Agreement or Company or, (2) except in the ordinary course of business consistent with past practicepractice or with respect to establishing cash compensation and benefits for any new hire, increase the compensation or other benefits payable or provided to employees who are not directors or executive officers of the Company, (B) enter into any employment, change of control, severance or retention agreement with any employee of the Company (except (1) for employment agreements terminable on less than 30 days’ notice without severance payment obligations or other penalty or (2) for severance agreements entered into with employees in the ordinary course of business consistent with past practice in connection with terminations of employment, provided no such agreement increases the amount that the Company or its Subsidiaries would be contractually obligated to pay to such employee absent such severance agreement), or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or 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, except as would not result in a material increase in cost to the Company;
(iv) shall not, and shall not permit any of its Subsidiaries to, change any of its financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws or similar applicable charter documents;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options and settlement of any Company Stock-Based Awards outstanding on the date hereof, and (B) the sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock if necessary to effectuate an optionee or direction upon exercise or for withholding of Taxes;
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(viii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offerotherwise), place except for any (A) indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or arrange among the Company’s wholly owned Subsidiaries, (B) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any issue existing indebtedness for borrowed money on materially no less favorable terms, (C) guarantees by the Company of debt securities, other than any indebtedness for borrowed money of Subsidiaries of the foregoing that Company, which indebtedness is incurred in compliance with this Section 5.1(b), (D) indebtedness for borrowed money incurred pursuant to working capital borrowings agreements in effect prior to the execution of this Agreement or letter the issuance of credit issuances under existing credit facilitiesnew commercial paper by the Company, in each case, case in the ordinary course of business consistent with past practice and would (E) indebtedness for borrowed money not reasonably be expected to delayexceed $5 million, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of plus any amounts needed by the Company Disclosure Schedule, make to consummate the transactions set forth on Schedule 5.1 in aggregate principal amount outstanding at any investment in excess time incurred by the Company or any of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, its Subsidiaries other than acquisitions pursuant to Contracts in effect as of the date of this Agreementaccordance with clauses (A)-(D), inclusive;
(ix) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material properties or assets, including any capital stock of Subsidiaries, except (A) pursuant to existing agreements in effect prior to the execution of this Agreement or (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby, subject to the limitations of Section 5.6(b);
(x) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Material Contract in any material respect in a manner which is adverse to the Company;
(xi) shall not, and shall not permit any of its Subsidiaries to, enter into any Company Material Contracts other than in the ordinary course of business consistent with past practice, practice or enter into, renew, extend, amend or terminate (A) into any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amountcollective bargaining agreement;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidationto, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change file any method of reporting for material amended Tax purposesReturn, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make liability for Taxes or surrender any material claim for a material refund of Taxes, other than in the case of each of clauses (B) and (C) or hereof in respect of any Taxes that have been identified in the reserves for Taxes in the Company’s GAAP financial statements included in the Company’s SEC Documents, (D) change any accounting method, practice or policy in respect of a material amount of Taxes except as required by applicable Law, (E) prepare any Tax Returns in a manner which is not consistent in all material respects with the past practice of the Company and its Subsidiaries with respect to the treatment of items on such Tax Returns, or (F) incur any material liability for Taxes other than in the ordinary course of business (including as a result of the operation of the business in the ordinary course);
(xiii) shall not, and shall not permit any of its Subsidiaries to, make any capital expenditure or expenditures which (i) involves the purchase of material real property or (ii) is in excess of $1,000,000500,000 individually or $5 million in the aggregate, except for any such capital expenditures provided for in the Company’s 2007 Capital Expenditure Plan previously made available to Parent;
(xviiixiv) shall not, and shall not permit any of its Subsidiaries to, directly or indirectly acquire (i) by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other than manner, any person or division, business or equity interest of any person or (ii) except in the ordinary course of business consistent with past practice, enter into any newassets that, individually, have a purchase price in excess of $500,000 or, in the aggregate, have a purchase price in excess of $5 million;
(xv) shall not, and shall not permit any of its Subsidiaries to, make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or materially amend loan or otherwise materially alter advance (other than travel and similar advances to its employees in the ordinary course of business consistent with past practice) to, any currentperson, agreement other than a direct or indirect wholly owned Subsidiary of the Company in the ordinary course of business;
(xvi) shall not, and shall not permit any of its Subsidiaries to, pay, discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than, subject to Section 5.13, the payment, discharge, settlement or satisfaction in accordance with any Affiliate the terms of such material liabilities, claims or obligations reflected or reserved against in the most recent consolidated financial statements (or the notes thereto) of the Company; orCompany included in the Company SEC Documents or incurred since the date of such financial statements in the ordinary course of business consistent with past practice;
(xixxvii) agree shall not, and shall not permit any of its Subsidiaries to, settle or compromise any litigation, proceeding or investigation material to take the Company and its Subsidiaries taken as a whole (this covenant being in addition to the Company’s agreement set forth in Section 5.13 hereof); and
(xviii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries to take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Comdata Network, Inc. Of California)
Conduct of Business by the Company and Parent. (a) From and after Subject to the other Sections of this Article IV, during the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each of the Company, Parent and the Parent Subsidiaries shall, except to the Effective Time or extent that the dateother party shall otherwise consent in writing, if any, carry on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in the case of Parent and the Parent Subsidiaries, or in a commercially reasonable manner, in the case of the Company, and in compliance with all applicable laws and regulations (except where noncompliance would not have a Material Adverse Effect), pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and use its commercially reasonable best efforts consistent with past practices and policies, in the case of Parent and the Parent Subsidiaries, or in a commercially reasonable manner, in the case of the Company, to (i) preserve substantially intact its present business organization, (Bii) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement, without the prior written consent of the other party, during the period from the date of this Agreement and adversely affect continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company, Parent and the Parent Subsidiaries shall not do any of the Parties following (and the Stockholder shall cause the Company not to obtain do any necessary approvals of the following):
(a) Waive any regulatory agency stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other Governmental Entity required stock plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting the generality of the foregoingGrant any severance or termination pay to any officer or employee except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the Effective Timeother party, except or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(ic) Except as set forth in Section 5.1(b) contemplated by the IP Transfer Agreement and the transactions contemplated thereunder, transfer or license to any Person or otherwise extend, amend or modify any material rights to any Intellectual Property of the Company Disclosure Scheduleor Parent, (ii) as Parent may consent in writing (which consentapplicable, with respect or enter into grants to transfer or license to any matter referred to Person future patent rights, other than in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to a commercially reasonable manner provided that in no event shall the Company or Parent license on an exclusive basis or sell any Intellectual Property of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned Company or delayed) or (iii) Parent as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:applicable;
(id) adjustDeclare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock;
(iie) makePurchase, declare redeem or pay any dividendotherwise acquire, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of its capital stock or other equity securities or ownership interests of such party including repurchases of unvested shares at cost in connection with the termination of the relationship with any employee or consultant pursuant to agreements in effect on the date hereof;
(f) Except for the offering on commercially reasonable terms by the Company of securities, debt or other equity of the Company to raise capital in furtherance of its business plan as described in the business section of the Proxy Statement/Prospectus (the “Capital Raise”), issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or other equity securities or ownership interests or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stockstock or other equity securities or ownership interests, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue stock or other equity securities or ownership interests or any securities convertible into or exchangeable for shares of capital stock except pursuant or other equity securities or other ownership interests, or enter into other agreements or commitments of any character obligating it to (A) the exercise of Company Stock Optionsissue any such shares, (B) the vesting of Company RSUs equity securities or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company ownership interests or another wholly owned Subsidiaryconvertible or exchangeable securities;
(vg) purchaseAmend its Charter Documents;
(h) Except as contemplated by the Farm Purchase Agreement and the transactions contemplated thereunder, acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets 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 which are material, individually or in the aggregate, to the business of Parent or the Company as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict such party’s ability to compete or to offer or sell any products or services. For purposes of this paragraph, “material” includes the requirement that, as a result of such transaction, financial statements of the acquired, merged or consolidated entity be included in the business section of the Proxy Statement/Prospectus);
(i) Except as contemplated by the IP Transfer Agreement and the transactions contemplated thereunder, sell, transferlease, mortgagelicense, encumber or otherwise dispose of any properties or assets having assets, except (A) sales of inventory in a value in excess of $1,000,000 in commercially reasonable manner, and (B) the aggregate to any Person sale, lease or disposition (other than to a wholly owned Subsidiary)through licensing) of property or assets that are not material, other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement individually or in the ordinary course aggregate, to the business of business consistent with past practicesuch party;
(vij) incurExcept as contemplated by the Capital Raise, assume, guarantee, prepay or become obligated with respect to incur any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 200,000 in the aggregate or guarantee any such indebtedness of another Person or Persons in excess of $200,000 in the aggregate, whether by purchase of stock issue or securities of, contributions to capital to, or purchase of sell any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or debt securities or contributions options, warrants, calls or other rights to capital in excess acquire any debt securities of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practicesuch party, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trustkeep well” or similar arrangement, (E) establish, adopt, amend other agreement to maintain any financial statement condition or terminate enter into any arrangement that would be a Company Benefit Plan if in having the economic effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do of any of the foregoing;
(xik) Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in a commercially reasonable manner with employees who are terminable “at will”), pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants, except in a commercially reasonable manner;
(l) Except as contemplated by the ordinary course Farm Purchase Agreement and the transactions contemplated thereunder, pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of business consistent this Agreement) other than the payment, discharge, settlement or satisfaction, in a commercially reasonable manner or in accordance with past practicetheir terms, or liabilities recognized or disclosed in the Audited Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred since the date of such financial statements, or waive the benefits of, agree to modify in any manner, terminate, release any Person from or knowingly fail to enforce any confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is a party or of which Parent is a beneficiary, as applicable;
(m) Except in a commercially reasonable manner, modify, amend or terminate any Material Company Contract or Parent Contract, as applicable, or waive, releasedelay the exercise of, assignrelease or assign any material rights or claims thereunder;
(n) Except as required by U.S. GAAP, revalue any of its assets or make any change in accounting methods, principles or practices;
(o) Except as contemplated by the Farm Purchase Agreement and the transactions contemplated thereunder and except in a commercially reasonable manner, incur or enter into any agreement, contract or commitment requiring such party to pay in excess of $200,000 in any 12 month period;
(p) Engage in any action that could reasonably be expected to cause the Mergers to fail to qualify as a Tax-free transactions pursuant to Section 351, Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Code;
(q) Settle any litigation where the consideration given is other than monetary or to which an Insider, or any officer, director, shareholder or holder of derivative securities of Parent, as applicable, is a party;
(r) Make or rescind any Tax elections that, individually or in the aggregate, could be reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any claimmaterial income Tax liability or, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than except as may be required by GAAP or applicable Law;
(xvii) (A) makelaw, change or revoke any material Tax election, (B) materially change any method of reporting accounting for Tax purposes, (C) settle purposes or compromise prepare or file any material Tax claim, audit or dispute, or (D) make or surrender any claim for Return in a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000manner inconsistent with past practice;
(xviiis) Form, establish or acquire any subsidiary except as contemplated by this Agreement and/or as specifically described in the business section of the Proxy Statement/Prospectus;
(t) Permit any Person to exercise any of its discretionary rights under any Plan to provide for the automatic acceleration of any outstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans;
(u) Except as contemplated by the Farm Purchase Agreement and the transactions contemplated thereunder, make capital expenditures except in accordance with prudent business and operational practices;
(v) Make or omit to take any action which would be reasonably anticipated to have a Material Adverse Effect;
(w) Enter into any transaction with or distribute or advance any assets or property to any of its officers, directors, partners, stockholders, managers, members or other Affiliates other than the payment of salary and benefits in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Companya commercially reasonable manner; or
(xixx) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided4.1 (a) through (w) above. In addition, that nothing in this Section 5.1(b) will preclude the fiduciaries Stockholder shall not do any of the 401(k) Plan from purchasingforegoing with respect to itself to the extent it prevents the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, no Capital Raise shall be consummated during the period commencing on the date of effectiveness of the Proxy Statement/Prospectus and ending on the earlier of the date of consummation of the Mergers or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes termination of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of ParentAgreement.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Triplecrown Acquisition Corp.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) Except as may be required by applicable Law set forth in Schedule 4.1 hereto or as expressly required by this Agreement, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or as permitted by Section 5.1(bthe Closing (the “Interim Period”), (ii) as disclosed in Section 5.1(a) each of the Company Disclosure Scheduleand its Subsidiaries, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), on the Company willone hand, and will cause each Parent, Holdco, Parent Merger Sub and Company Merger Sub and their respective Subsidiaries, on the other hand, shall, except to the extent that the other set of its Subsidiaries to (A) conduct its business parties shall otherwise consent in writing, in all material respects carry on its business in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable best efforts consistent with past practices and policies to (i) preserve substantially intact its present business organization, (Bii) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement or set forth in Schedule 4.1 hereto, without the prior written consent of the other set of parties, during the Interim Period, each of the Company and adversely affect or delay its Subsidiaries, on the ability of one hand, and Parent, Holdco, Parent Merger Sub and Company Merger Sub and their respective Subsidiaries, on the other hand, shall not do any of the Parties to obtain following:
(a) Waive any necessary approvals stock or membership interest repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock or membership interests, or reprice options granted under any regulatory agency employee, consultant, director or other Governmental Entity required stock or membership interest plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting Grant any severance or termination pay to any officer or employee outside the generality ordinary course of the foregoingbusiness except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent previously or concurrently disclosed in writing or made available to the other party, or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(which consent, with respect c) Transfer or license to any matter referred to in items (v)Person or otherwise extend, (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect amend or modify any material rights to any Intellectual Property of such party or its Subsidiaries, or enter into grants to transfer or license to any Person any material future patent rights, other than in the foregoing enumerated items) belowordinary course of business consistent with past practices, provided that in no event shall not be unreasonably withheld, conditioned such party or delayed) its Subsidiaries license out on an exclusive basis or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each sell any of its Subsidiaries not to:or its Subsidiaries’ material Intellectual Property;
(id) adjustDeclare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or membership interests or split, combine or reclassify any capital stock or otherwise amend membership interests or issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stockstock or membership interests;
(iie) makePurchase, declare redeem or pay otherwise acquire, directly or indirectly, any dividendcapital stock or membership interests of such party or its Subsidiaries;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber, or make agree to any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberof the foregoing with respect to, any shares of its capital stock or membership interests or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stockstock or membership interests, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue stock or membership interests or any securities convertible into or exchangeable for shares of capital stock except pursuant or membership interests, or enter into other agreements or commitments of any character obligating it to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs issue any such shares or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company membership interests or another wholly owned Subsidiaryconvertible or exchangeable securities;
(vg) purchaseAmend its Charter Documents;
(h) Acquire or agree to acquire by merging or consolidating with, sellor by purchasing any equity interest in or a portion of the assets of, transferor by any other manner, mortgageany business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of such party and its Subsidiaries taken as a whole, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict the ability of such party or its Subsidiaries to compete or to offer or sell any products or services. For purposes of this paragraph, “material” includes the requirement that, as a result of such transaction, financial statements of the acquired, merged or consolidated entity be included in the Proxy Statement/Prospectus (as defined in Section 5.1);
(i) Sell, lease, license, encumber or otherwise dispose of any properties or assets having a value in excess assets, except (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary)inventory and property, other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice plant and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except equipment in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or and (B) any Contracts the sale, lease or disposition (other than through licensing) of property or assets that are not material, individually or in the ordinary courseaggregate, involving to the commitment or transfer business of value in excess of $1,000,000 in the aggregate in any yearsuch party and its Subsidiaries taken as a whole;
(xj) except Incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person or Persons, issue or sell any debt securities or options, warrants, calls or other rights to the extent required by Law or acquire any Company Benefit Plan in effect as debt securities of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company such party or any of its Subsidiaries, except for increases in base salary enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing;
(k) Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practicepractice with employees who are terminable “at will”), (B) pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or retirement benefits to any employees, indemnification) of its directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practiceemployees or consultants, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practicepractices;
(l) Pay, waive, release, assigndischarge, settle or compromise satisfy any claimclaims, action liabilities or proceedingobligations (absolute, other than waiversaccrued, releasesasserted or unasserted, assignmentscontingent or otherwise), settlements or compromises that involve only the payment of monetary damages litigation (whether or not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions commenced prior to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses date of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviiithis Agreement) other than the payment, discharge, settlement or satisfaction of claims, obligations or litigations in the ordinary course of business consistent with past practicepractices or in accordance with their terms, or liabilities recognized or disclosed in the Unaudited Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred since the date of such financial statements;
(m) Waive the benefits of, agree to modify in any manner, terminate, release any Person from or knowingly fail to enforce any confidentiality or similar agreement to which such party or any of its Subsidiaries is a party or of which such party or any of its Subsidiaries is a beneficiary;
(n) Except in the ordinary course of business consistent with past practices, modify, amend or terminate any Material Company Contract or Parent Contract, as applicable, or waive, delay the exercise of, release or assign any material rights or claims thereunder;
(o) Except as required by U.S. GAAP or as set forth in Schedule 4.1(o), revalue any of its assets or make any change in accounting methods, principles or practices;
(p) Except in the ordinary course of business consistent with past practices, incur or enter into any newagreement, contract or commitment (i) requiring such party to pay in excess of $200,000 in any 12 month period or (ii) with a customer for services in excess of $200,000 in any 12 month period;
(q) Settle any litigation where the consideration given is other than monetary or to which an Insider is a party;
(r) Make or rescind any Tax elections that, individually or in the aggregate, would reasonably be expected to adversely affect in any material respect the Tax liability or Tax attributes of such party or its Subsidiaries, settle or compromise any material income tax liability or, except as required by applicable law, materially amend change any method of accounting for Tax purposes or otherwise materially alter prepare or file any currentTax Return in a manner inconsistent with past practice;
(s) Form, agreement establish or obligations acquire any Subsidiary;
(t) Permit any Person to exercise any of its discretionary rights under any Plan to provide for the automatic acceleration of any outstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans;
(u) Make capital expenditures in excess of $50,000 in the aggregate;
(v) Knowingly make or omit to take any action which would reasonably be expected to have a Material Adverse Effect on such party and its Subsidiaries taken as a whole;
(w) Enter into any transaction with or distribute or advance any Affiliate assets or property to any of its officers, directors, partners, members, managers, stockholders or other Affiliates other than the Companypayment of salary and benefits in the ordinary course of business consistent with prior practice; or
(xixx) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1(a) will preclude the fiduciaries of the 401(kthrough (w) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Cullen Agricultural Holding Corp)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the earlier of the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1 and except (i) as may be required by applicable Law, (ii) as may be consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), (iii) as may be required by this Agreement, or (iv) as set forth in Section 5.1(a) of the Company Disclosure Letter, the Company shall, and shall cause each of its Subsidiaries to, use its commercially reasonable efforts to conduct the Company’s business in the ordinary course consistent with past practice and preserve in all material respects its business organization and maintain in all material respects existing relations and goodwill with Governmental Authorities, customers, suppliers, creditors, lessors, officers, employees and parties to any JV Agreement.
(b) Subject to the exceptions contained in clauses (i) through (iv) of Section 5.1(a), from and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Scheduleshall not, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each permit any of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain it being understood and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no hereby agreed that if any action which would materially and adversely affect or delay the ability of is expressly permitted by any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoingfollowing subsections, between the date hereof and the Effective Time, except (i) as set forth in such action shall be expressly permitted under Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v5.1(a), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:):
(i) adjust, split, combine amend its certificate of incorporation or reclassify any capital stock bylaws or otherwise amend the terms of its capital stockother applicable governing instruments;
(ii) makesplit, declare combine, subdivide or pay reclassify any dividendshares of capital stock of the Company or enter into any agreement with respect to the voting of the capital stock of the Company;
(iii) issue, sell, pledge, grant, transfer, encumber or make any other distribution on, otherwise dispose of or directly or indirectly redeem, purchase repurchase or otherwise acquire any shares of capital stock or encumberother equity interests of the Company or any of its Subsidiaries, 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 its capital stock of the Company or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except Subsidiaries (other than (A) for the issuance of shares of Common Stock upon the exercise of Company Options outstanding as of the date of this Agreement, (B) issuances or grants under the ESPP with respect to the offering period in effect on the date of this Agreement, (C) by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company or (D) pursuant to net settlements or exercises of outstanding Company Options or Company Restricted Stock in satisfaction of the exercise price and/or Tax withholding relating to such award);
(iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to the Company’s capital stock (except dividends or other distributions paid by any direct or indirect wholly wholly-owned Subsidiary to the Company or to any other direct or indirect wholly wholly-owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary);
(v) purchasemake any acquisition (whether by merger, sellconsolidation, transfer, mortgage, encumber acquisition of stock or otherwise dispose assets or otherwise) of any properties interest in any Person or any business, line of business or division thereof (which for the avoidance of doubt shall not include ordinary course acquisitions of assets having a value in excess of $1,000,000 used in the aggregate to any Person operation of the Company’s business that are covered by clause (vi) below);
(vi) other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incurbusiness, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person any assets or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregateproperties, other than (A) acquisitions pursuant permitted to Contracts in effect as clause (v) above, (B) acquisitions of the date of this Agreement;
(ix) except inventory made in the ordinary course of business consistent with past practice, enter into, renew, extend, amend with a value or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value purchase price in excess of $1,000,000 in the aggregate or (C) assets in any yearrespect of capital expenditures permitted pursuant to clause (xiv) below;
(xvii) except make any loans, advances or capital contributions to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase investments in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of Person (other than the Company or any direct or indirect wholly-owned Subsidiary of its Subsidiariesthe Company), except for increases in base salary other than (A) trade credit advanced in the ordinary course of business consistent with past practice, (B) pay any severance loans, advances, capital contributions or retirement benefits to any employees, directors, consultants or independent contractors investments required by JV Agreements in effect as of the Company date of this Agreement or any of its Subsidiaries, except with respect (C) to officers, employees and directors for business and consultants travel expenses in the ordinary course of business consistent with past practice;
(viii) incur or assume any Indebtedness, other than borrowings in the ordinary course of business consistent with past practice under the Company’s existing credit facilities;
(Cix) accelerate settle or compromise any litigation, claim or other proceeding against the vesting ofCompany or any of its Subsidiaries other than (A) cash settlements or compromises and (B) ordinary course releases of liability, in each case not exceeding $150,000 individually or $1,000,000 in the lapsing aggregate;
(x) transfer, lease, license, sell, mortgage, pledge, dispose of forfeiture restrictions or conditions subject to any Lien (other than Permitted Liens) any of its material assets, other than (A) sales of inventory in the ordinary course of business consistent with respect to, past practice and (B) dispositions of used or obsolete assets no longer used in the operation of the business;
(xi) except as required by any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if Plans as in effect on the date hereof of this Agreement or (F) enter into, amend, alter, adopt, implement applicable Law or otherwise make any commitment the payment of quarterly bonuses to do any personnel in the ordinary course of business consistent with past practice and in accordance with terms and conditions provided to Parent as of the foregoing;
date of this Agreement, (xiA) increase the compensation or other benefits payable or provided to the Participants who are current or former directors or executive officers; (B) except in the ordinary course of business consistent with past practice, waiveincrease the compensation or other benefits payable or provided to the Participants who are not current or former directors or executive officers; or (C) establish, releaseadopt, assignenter into, settle amend (including acceleration of vesting or compromise payment), modify or terminate any claimCompany Benefit Plan or plan, action program, policy, agreement or proceeding, other than waivers, releases, assignments, settlements or compromises arrangement that involve only would have been a Company Benefit Plan had it been in effect on the payment date of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amountthis Agreement;
(xii) amend adopt or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization consolidation or other reorganization of such entitythe Company or any of its Subsidiaries (other than the Merger);
(xvixiii) implement or adopt except as may be required by a change in GAAP, make any material change in its Tax or financial accounting principles, practices policies or methods, other than as may be required by GAAP or applicable Lawpractices;
(xviixiv) make any capital expenditures that, in the aggregate, exceed the aggregate amount of expenditures provided for in the Company’s capital expenditure plan provided to Parent in writing prior to the date of this Agreement by more than $2,000,000;
(A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than normal vendor renewals, extensions or 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 Company Material Contract or (B) enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations Contract that, if entered into prior to the date of this Agreement, would qualify as a Company Material Contract under any of clauses (ii) or (v) through (xii) of Section 3.18(a) (it being understood that the renewal, extension or replacement of any Contract in the ordinary course of business consistent with past practice that contains terms described in those clauses shall be permitted if the Contract being renewed, extended or replaced contains such terms and the renewal Contract contains the same such terms or comparable terms that are no less favorable to the Company and its Subsidiaries);
(xvi) enter into any Affiliate 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 Companydate of this Agreement;
(A) make any change (or file any such change) in any material method of Tax accounting (except as required by applicable law), (B) make or change any material Tax election other than those in the ordinary course of business to be made on original Tax Returns required to be filed prior to the Closing; (C) settle or compromise any material Tax liability or consent to any claim or assessment relating to a material amount of Taxes; (D) file any amended Tax Return reflecting a material amount of income Taxes; or (E) enter into any closing agreement relating to a material amount of Taxes;
(xviii) willfully and intentionally take any action that would reasonably be expected to materially impair, prevent or delay the consummation of the Transactions; or
(xix) agree to take agree, resolve, authorize or make any commitment commit to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition Effective Time, Parent and Merger Sub shall not, and shall not permit any of Company Material Adverse Effecttheir respective Subsidiaries or Affiliates to, willfully and intentionally take or agree to take any action which would reasonably be expected to impair, prevent or delay (i) the consent ability of any Officer Shareholder will be deemed Parent or Merger Sub to perform its obligations under this Agreement or (ii) the consent consummation of Parentthe transactions contemplated by this Agreement.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, with the prior written consent of Parent, (iii) as expressly contemplated, required or permitted by this Agreement or (iv) as set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)Letter, the Company will, shall and will shall cause each of its Subsidiaries to (Ax) conduct its business in all material respects in the ordinary course consistent with past practice, practice and (By) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality of the foregoing, between Between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned Letter or delayed) or (iii) as otherwise expressly contemplated or expressly permitted by this Agreement, without the Company will and will cause each prior written consent of its Subsidiaries not toParent, the Company:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) shall not make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises or similar transactions pursuant to the exercise of stock options or other awards issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right Plans or permitted hereunder to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, be granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of after the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of ; provided that the Company may continue to pay regular quarterly cash dividends on the Common Stock consistent with past practice (not to exceed $0.05 per share per quarter) and this Section 5.1(b)(i) shall not apply to dividends or distributions paid in cash by Subsidiaries to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or Subsidiaries in the ordinary course of business consistent with past practice;
(ii) shall not, and shall not permit any of its Subsidiaries to, adjust, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, 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) shall not, and shall not permit any of its Subsidiaries to, make any material change (or file any such change) in any method of Tax accounting or make any material change in any Tax election (except, in each case, as in the ordinary course of business or as is consistent with past practice); settle or compromise any material Tax liability for an amount materially in excess of the amount reserved therefor on the financial statements included in the Company SEC Documents, or enter into any closing agreement relating to Taxes for an amount materially in excess of the amount reserved therefor on the financial statements included in the Company SEC Documents;
(iv) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to the Company’s directors or executive officers except for increases to executive officers in the ordinary course of business consistent with past practice that become effective no earlier than July 1, 2007 and only in the event the Effective Time does not occur prior to such date, (B) enter into any employment, change in control, severance or retention agreement with any employee of the Company or (C) establish, adopt, enter into or amend any collective bargaining agreement, or Company Benefit Plan, except to the extent required to comply with Section 409A of the Code or as may be immaterial;
(v) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its officers, directors, employees, agents or consultants (other than loans or advances in the ordinary course of business consistent with past practice, including without limitation stock loans made under the Company’s Stock/Loan Plan to the extent approved for fiscal 2007 on June 26, 2006 by the Compensation Committee and the Board of Directors of the Company) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons, except as required by the terms of any Company Benefit Plan;
(vi) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vii) shall not, and shall not permit any of its material Subsidiaries to, amend or waive any provision of its certificate of incorporation or by-laws or similar applicable charter documents or in the case of the Company, enter into any agreement with any of its stockholders in their capacity as such;
(viii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable Company Stock Option under any existing Company Stock Option Plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of shares of Common Stock in respect of any exercise of Company Stock Options and settlement of any Performance Shares outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b), (B) the grant of equity compensation awards in the ordinary course of business consistent with past practice under the Company’s 2004 Amended and Restated Equity Incentive Compensation Plan in accordance with the Long-Term Incentive Compensation Program and Regular Stock/Loan and Restricted Stock Grant Program approved for fiscal 2007 on June 26, 2006 by the Compensation Committee and the Board of Directors of the Company, and (C) the acquisition of shares of Common Stock from a holder of a Company Stock Option, Restricted Shares or Performance Shares in satisfaction of withholding obligations or in payment of the exercise price;
(ix) except for transactions in the ordinary course of business consistent with past practice, among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its material Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(x) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offer, place or arrange any issue of debt securitiesotherwise), other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries and (B) indebtedness for borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement not reasonably be expected to delay, adversely affect exceed $10 million in aggregate principal amount outstanding at any time incurred by the Company or impede Parent’s ability to obtain any of its Subsidiaries; provided that no such indebtedness shall contain covenants that materially restrict the FinancingMerger or that are materially inconsistent with the Financing Commitments in effect as of the date hereof;
(viixi) except as specifically contemplated in Section 5.1(b) of for transactions among the Company Disclosure Scheduleand its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets (excluding sales of finished goods inventories in the ordinary course of business), including the capital stock of Subsidiaries;
(xii) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Specified Contract in any material respect in a manner which is adverse to the Company other than in the ordinary course of business or enter into any Company Specified Contract other than in the ordinary course of business and other than in response to an unexpected disruption in supply;
(xiii) shall not make any capital expenditures having an aggregate value in excess of (i) with respect to the Company’s fiscal year ending June 30, 2007, together with the amount of capital expenditures made by the Company through the date hereof, $42 million and (ii) with respect to the Company’s fiscal quarter ending September 30, 2007, $10 million;
(xiv) shall not make any investment in excess of $5,000,000 500,000 in the aggregate, whether by purchase of stock or securities ofsecurities, contributions to capital tocapital, property transfers, or purchase of entering into binding agreements with respect to any property such investment or assets of any other Personacquisition;
(viiixv) shall not make any acquisition of another Person or businessbusiness in excess of $500,000 in the aggregate, whether by purchase of stock or securities or securities, contributions to capital in excess of $5,000,000 in the aggregatecapital, other than acquisitions pursuant property transfers, or entering into binding agreements with respect to Contracts in effect as of the date of this Agreementany such investment or acquisition;
(ixxvi) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts shall not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 500,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any obligation claims, liabilities or liability of the Company obligations in excess of such amount, in each case, other than in the ordinary course consistent with past practice;
(xiixvii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI shall not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000reorganization;
(xviii) shall not take any material action with respect to any affiliate of the Company (other than in any wholly owned Subsidiaries of the Company) that is outside the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or;
(xix) shall not agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); providedand
(xx) shall not, that nothing and shall not permit any of its Subsidiaries to, agree, in this Section 5.1(b) will preclude the fiduciaries writing or otherwise, to take any of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries and affiliates, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Elkcorp)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed in Section 5.1(a) with the prior written consent of the Company Disclosure ScheduleParent, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), (iii) as expressly contemplated or expressly permitted by this Agreement or (iv) as disclosed in Section 5.1 of the Company Disclosure Schedule, the Company willshall, and will shall cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practicepractices, (B) and use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous significant business relationships and to retain the services of its key officers and key employees; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 5.1 shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. In the event that (i) the Company requests the written consent of Parent to take any action otherwise prohibited by this Section 5.1 and (Cii) take no action which would materially and adversely affect Parent does not grant such consent, any fact, circumstance, event, change, effect or delay occurrence resulting directly from the ability of any failure of the Parties Company to obtain any necessary approvals be able to take such action as result of any regulatory agency the failure of Parent to grant its written consent shall not constitute, or other Governmental Entity required for be considered in determining the Transactions existence or occurrence of, a Company Material Adverse Effect; provided, however, that this exception in clauses (i) and (ii) shall not prevent or otherwise materially delay affect a determination that any fact, -32- circumstance, event, change, effect or prohibit occurrence (A) has resulted in a Company Material Adverse Effect or (B) may be a breach of a representation, warranty or covenant of the TransactionsCompany, in each case to the extent such fact, circumstance, effect or occurrence existed prior to the time the Company requests an action to be taken with Parent’s consent.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent consented to in writing by Parent (which consent, with respect such consent not to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will shall not, and will cause each shall not permit any of its Subsidiaries not to, without the prior written consent of Parent:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises or similar transactions pursuant to the exercise of stock options or other awards issued and outstanding as of the date hereof under the Company Stock Plans; provided, that this Section 5.1(b)(ii) shall not apply to (A) dividends or distributions paid by wholly-owned Subsidiaries of the Company to the Company or to other wholly-owned Subsidiaries or (B) dividends or distributions paid by Subsidiaries of the Company, other than wholly-owned Subsidiaries, that are not within the discretion or control of the Company or its Subsidiaries;
(iii) grant any Person person any right to acquire any shares of its capital stockstock except as required under any existing agreement as listed in Section 5.1(b)(iii) of the Company Disclosure Schedule;
(iv) issue issue, deliver, sell, grant, or pledge any (A) shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs stock options or Company Performance Shares, granted other awards issued under the Company Stock Plans issued and outstanding as of the date hereof and in accordance with the terms of such instruments as instruments; provided, that the Company shall not issue any Shares under the Stock Purchase Plan; (B) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any shares of the date hereofits capital stock or securities, and or (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereofany “phantom” stock, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company “phantom” stock rights, stock appreciation rights or another wholly owned Subsidiarystock-based performance units;
(v) except for hedging agreements entered into in the ordinary course of business consistent with past practice, purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 5,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary)aggregate, other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or if not in the ordinary course of business consistent with past practice, in excess of $1,500,000 in the aggregate;
(vi) make any capital expenditures in any fiscal quarter exceeding the Company’s capital expenditure budget (a copy of which has been previously provided to Parent) -33- for such fiscal quarter (a) by more than 1% of the aggregate quarterly budget, or, (b) for each project category, by more than 15% of the quarterly budget for such category; provided that if the aggregate amount spent in any fiscal quarter is less than the aggregate amount set forth in the budget for that quarter, then the amount of such underspend may be spent in the immediately following fiscal quarter (but not in any subsequent quarters) based on a pro rata allocation of such underspend among the project categories based on the full-year total budget allocation among such categories. For purposes of this Section 5.1(b)(vi), the parties agree that the underspend amount for each project category for the first fiscal quarter of 2007 is as set forth in Section 5.1(b)(vi) of the Company Disclosure Schedule, and the Company may carry forward these underspend amounts and apply them to the relevant project categories in the capital expenditure budget for the second fiscal quarter of 2007;
(vii) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securitiesmoney, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances (A) drawdowns under existing credit facilities, in each case, facilities made in the ordinary course of business consistent with past practice practice, provided that the aggregate amount of any such drawdowns may not at any time exceed $10,000,000 (but disregarding amounts borrowed in respect of payment by the Company of the $30,000,000 termination fee under the Talon Merger Agreement) or (B) issuances of letters of credit, surety bonds, guarantees of indebtedness for borrowed money and would security time deposits made under existing credit facilities in the ordinary course of business consistent with past practice, subject to a $5,000,000 individual cap or, in the case of any such issuances which are related to a common project or business purpose, a $5,000,000 aggregate cap for such related issuances, and provided that the aggregate outstanding amount of any issuances of letters of credit, surety bonds, guarantees of indebtedness for borrowed money and security time deposits may not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingexceed $101,000,000 at any time;
(viiviii) except as specifically contemplated in Section 5.1(bmake any acquisition (including by merger, consolidation or other business combination) of the Company Disclosure Schedule, make any investment another Person or business in excess of $5,000,000 in the aggregate, or, if not in the ordinary course of business consistent with past practice, in excess of $1,000,000 in the aggregate, whether by purchase of stock or securities ofsecurities, contributions to capital to, or purchase of any property or assets of any (other Person;
than (viiiA) make any acquisition of another Person or business, whether by purchase of stock or securities or capital contributions to wholly-owned Subsidiaries of the Company and (B) capital in excess contributions to Subsidiaries of $5,000,000 in the aggregateCompany, other than acquisitions pursuant to Contracts in effect as wholly-owned Subsidiaries, that are not within the discretion of the date of this AgreementCompany or its Subsidiaries), property transfers, or entering into binding agreements with respect to any such investment or acquisition;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, materially amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract, in each case, other than any Contract or relating to indebtedness that would not be prohibited under clause (Bvii) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any yearthis Section 5.1(b);
(x) except to the extent required by Law or any Company Benefit Plan by Contracts in effect existence as of the date hereof, (A) increase in any manner the compensation or benefits of any of its present or former, employees, officers, directors, consultants or consultants, independent contractors of the Company or any of its Subsidiaries, service providers except for increases in base salary in the ordinary course of business consistent with past practicepractice (including, for this purpose, the normal employee salary, and bonus compensation review process conducted each year); provided, however, that this exception shall not apply to the individuals listed on Section -34- 5.1(b)(x) of the Company Disclosure Schedule, (B) pay pay, or increase the amounts payable under, any severance pension, severance, change in control, retirement or retirement similar benefits not required by any existing plan or agreement to any such present or former employees, officers, directors, consultants or consultants, independent contractors or service providers, (C) enter into, renew, amend, alter, adopt, implement or otherwise commit itself to any compensation or benefit plan, program, policy, arrangement or agreement including any pension, retirement, profit-sharing, change in control, bonus or other employee benefit or welfare benefit plan, policy, arrangement or agreement or employment, change in control, retention severance, consulting or collective bargaining or similar agreement with or for the benefit of any present or former employee, officer, director, consultant or service provider (other than amendments to a Company Benefit Plan that do not materially increase the cost to the Company or any of its SubsidiariesSubsidiaries of maintaining such plan, policy, arrangement or agreement), except with respect to officers, directors and consultants in the ordinary course extent necessary to satisfy the documentary compliance requirements of business consistent with past practiceSection 409A of the Code or to avoid application of Section 409A of the Code, (CD) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity stock options or equityother stock-based awardscompensation, (DE) establish or cause the funding of any “rabbi trust” trust or similar arrangement, (E) establish, adopt, amend arrangement or terminate take any arrangement that would be a action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan if in effect on the date hereof Plan, or (F) enter intomaterially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, amend, alter, adopt, implement except as may be required by GAAP or otherwise make any commitment to do any of the foregoingapplicable Law;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises not exceeding the amount reserved against in the financial statements contained in the Company SEC Documents, or that involve only the payment of monetary damages not in excess of $1,000,000 1,250,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any obligation claims, liabilities or liability of the Company obligations in excess of such amount, in each case, other than in the ordinary course consistent with past practice;
(xii) amend or waive any provision of the Charter Documentsarticles of incorporation and bylaws or other equivalent organizational documents of the Company or any of its material Subsidiaries or, in the case of the Company, enter into any agreement with any of its shareholders in their capacity as such;
(xiii) take or omit to take any action that is intended or would reasonably be expected to to, individually or in the aggregate, result in any of the conditions to the Merger set forth in Article VI not being satisfiedsatisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
(xiv) enter into any “non-compete”, “non-solicit” or similar agreement that would materially restrict the businesses of the Surviving Corporation, Corporation or its Subsidiaries or its current their ability to solicit customers or future Affiliates employees following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;; -35-
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP GAAP, applicable Law or applicable Lawregulatory guidelines;
(xvii) (A) enter into any closing agreement with respect to material Taxes, settle or compromise any material liability for Taxes, make, revoke or change or revoke any material Tax election, (B) change agree to any method adjustment of reporting for Tax purposes, (C) settle or compromise any material Tax claimattribute, audit or dispute, or (D) make file or surrender any claim for a material refund of Taxes, in execute or consent to any waivers extending the case statutory period of each limitations with respect to the collection or assessment of (C) material Taxes, file any material amended Tax Return or (D) in excess of $1,000,000obtain any material Tax ruling;
(xviii) enter into any new, or amend or otherwise alter any Affiliate Transaction or transaction which would be an Affiliate Transaction if such transaction occurred prior to the date hereof;
(xix) make any loans to any individual (other than advances of out-of-pocket business expenses to employees, contractors or consultants in the ordinary course of business and consistent with past practicepractices) or make any material loans, enter into any newadvances or capital contributions to, or materially amend or otherwise materially alter investments in, any currentother Person in excess of $3,000,000 in the aggregate for all such loans, agreement or obligations with any Affiliate advances, contributions and investments, except for (i) transactions solely among the Company and/or wholly-owned Subsidiaries of the Company, or (ii) as required by existing contracts set forth in Section 5.1(b)(xix) of the Company Disclosure Schedule;
(xx) incur or pay fees, expenses or commissions to be paid to financial, legal and other advisors in connection with consummation of the transactions contemplated by this Agreement other than as described in Section 3.23 of the Company Disclosure Schedule; or
(xixxxi) agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Egl Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or Law, (ii) with the prior written consent of Parent, (iii) as expressly contemplated, required or permitted by this Agreement or as permitted by Section 5.1(b), (iiiv) as disclosed set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company willshall, and will shall cause each of its Subsidiaries to to, (A) conduct its business in all material respects in the ordinary course consistent with past practice, practice and (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous to preserve its relationships with its customers, suppliers, employees and others having business relationships and to retain the services of its key officers and key employeesdealings with it; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof of this Agreement and the Effective Time, except (i) as set forth in Section 5.1(b) of Time or the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementTermination Date, the Company will shall not, and will cause each shall not permit any of its Subsidiaries not to, directly or indirectly, without the prior written consent of Parent:
(i) adjustdeclare, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare authorize or pay any dividend, dividends on or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of with respect to its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise whether in cash, assets, shares or other securities of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereofor its Subsidiaries), and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares except cash dividends paid by a wholly wholly-owned Subsidiary Subsidiaries of the Company to the Company or another wholly wholly-owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as Subsidiary of the date of this Agreement or Company in the ordinary course of business consistent with past practice;
(ii) adjust, split, combine or reclassify, or otherwise amend the terms of, any of its capital stock or other equity securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity securities;
(iii) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law (including Section 409A of the Code), (A) except in the ordinary course of business consistent with past practice (including increases in base salary or hourly rate), increase in any manner the compensation or other benefits payable or provided to the Company’s employees, directors, consultants, independent contractors or service providers, (B) pay any pension, severance or retirement benefits not required by any existing plan or agreement to any such employees, directors, consultants, independent contractors or service providers (other than “stay” bonuses as may be mutually agreed upon in writing by Parent and the Company), (C) enter into, amend, alter (other than amendments that are immaterial to the participants or employees, directors, consultants, independent contractors or service providers who are party thereto and do not materially increase the cost to the Company or any of its Subsidiaries of maintaining the applicable compensation or benefit program, policy, arrangement or agreement), adopt, implement or otherwise commit itself to any compensation or benefit plan, program, policy, arrangement or agreement including any pension, retirement, profit-sharing, bonus or other employee benefit or welfare benefit plan, policy, arrangement or agreement or employment or consulting agreement with or for the benefit of any employee, director, consultant, independent contractor or service provider (other than “stay” bonuses as may be mutually agreed upon in writing by Parent and the Company), (D) except as contemplated by this Agreement, accelerate the vesting of, or the lapsing of restrictions with respect to, any stock options or other stock-based compensation, (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 Company Benefit Plan, or (F) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined;
(iv) implement or adopt any material change in its Tax or financial accounting principles, policies, procedures or practices or any of its methods of reporting income, deductions or other material items for Tax or financial accounting purposes, except as required by GAAP, SEC or Internal Revenue Service rule or policy or applicable Law;
(v) enter into any closing agreement with respect to material Taxes, settle or compromise any material liability for Taxes, make, revoke or change any material Tax election unless required by Law, agree to any adjustment of any material Tax attribute, file or surrender any claim for a material refund of Taxes, execute or consent to any waivers extending the statutory period of limitations with respect to the collection or assessment of material Taxes, file any material amended Tax Return or obtain any material Tax ruling;
(vi) amend or waive any provision of its articles of incorporation or its code of regulations, partnership agreement, operating agreement or other equivalent organizational documents or, in the case of the Company, enter into any agreement with any of its shareholders in their capacity as such;
(vii) grant, issue, deliver, sell, pledge, dispose of or encumber, or authorize the grant, issuance, delivery, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest or any securities convertible into or exchangeable for any such shares or ownership interest, or any subscriptions, rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any Company Share Plans (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date of this Agreement), other than issuances of Common Shares in respect of any exercise of Company Stock Options and settlement of any Company Share-Based Awards outstanding on the date of this Agreement in accordance with their terms;
(viii) purchase, redeem or otherwise acquire, any shares of its capital stock or other ownership interest or any securities convertible into or exchangeable for any such shares or ownership interest, or any subscriptions, rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities;
(ix) incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offer, place or arrange any issue of debt securitiesotherwise), other than indebtedness for borrowed money for working capital purposes incurred under the revolving portion of the Company’s existing credit facility in the ordinary course of business consistent with past practice with the aggregate amount of such indebtedness not to exceed $55,000,000 at any one time; issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries; guarantee, endorse or otherwise become liable for any debt securities of another person; enter into any “keep well” or other agreement to maintain any financial statement condition of any other person (other than any wholly-owned Subsidiary of the foregoing Company);
(x) sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any properties or assets, other than inventory or used equipment in the ordinary course of business consistent with past practice;
(xi) (A) modify, amend, terminate, waive or fail to enforce any rights under any Company Material Contract in any material respect in a manner which is adverse to the Company other than in the ordinary course of business consistent with past practice, or (B) enter into any contract, agreement, arrangement or understanding that is pursuant would be required to working be set forth in Section 3.20 of the Company Disclosure Schedule other than in the ordinary course of business consistent with past practice;
(xii) at any time during the ninety (90) days before the Closing Date, without complying with the notice and other requirements of the WARN Act and any similar state, local or foreign Law relating to plant closings and layoffs, effectuate (A) a “plant closing” (as defined in the WARN Act or any similar state, local or foreign Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company and/or any of its Subsidiaries, or (B) a “mass layoff” (as defined in the WARN Act or any similar state, local or foreign Law) affecting any site of employment or facility of the Company and/or any of its Subsidiaries;
(xiii) make any capital borrowings expenditures not contemplated by the Company’s capital expenditure budget (a true and correct copy of which has been delivered to Parent) having an aggregate value in excess of $300,000;
(xiv) acquire any material properties or letter assets other than (A) capital expenditures subject to the limitations set forth in (xiii) above, (B) purchases of credit issuances under existing credit facilitiescomponents, in each caseinventory, raw materials or supplies in the ordinary course of business consistent with past practice and would not reasonably be expected (C) leases of stores and market delivery centers as contemplated by the Company’s budget (a true and correct copy of which has been delivered to delay, adversely affect or impede Parent’s ability to obtain the Financing);
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viiixv) make any acquisition of of, or investment in, another Person person or business, whether by purchase of stock or securities or securities, contributions to capital in excess of $5,000,000 in the aggregatecapital, other than acquisitions pursuant to Contracts in effect as of the date of this Agreementproperty transfers or otherwise;
(ixxvi) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 500,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any obligation claims, liabilities or liability of the Company obligations in excess of such amount, in each case, other than in the ordinary course of business consistent with past practice;
(xiixvii) amend take or waive any provision of the Charter Documents;
(xiii) omit to take any action that is intended or would reasonably be expected to to, individually or in the aggregate, result in any of the conditions to the Merger set forth in Article VI not being satisfiedsatisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xvxviii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
entity (xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of respect to the Company, this Agreement and the Merger); or
(xix) agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Lesco Inc/Oh)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except 7.1 (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(bthe “Termination Date”), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure ScheduleLetter, (ii) as Parent may consent be required by applicable Law, (iii) as may be agreed in writing by Parent (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned) or (iiiiv) as otherwise may be required or expressly contemplated permitted by this Agreement, the Company will covenants and will cause each agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in all material respects in the ordinary course of business consistent with past practice; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) From and after the date hereof and prior to the Effective Time or the Termination Date, if any, except (i) as set forth in Section 5.1 of the Company Disclosure Letter, (ii) as may be required by applicable Law, (iii) as may be required or expressly permitted by this Agreement, or (iv) as may be agreed in writing by Parent (which consent shall not tobe unreasonably withheld, delayed or conditioned), the Company agrees with Parent, on behalf of itself and its Subsidiaries, that without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the Company:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid by Subsidiaries of the Company to the Company or to any of its wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to split, combine or reclassify any of its capital stock or otherwise amend issue or authorize or propose the terms issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iiiii) makeexcept as required by existing written agreements or Company Benefit Plans, declare shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or pay other benefits payable or provided to the Company’s directors, executives or employees, other than with respect to increases in compensation and benefits to employees having a title of Vice President or below in the ordinary course of business consistent with past practice not to exceed an aggregate increase of 2.5%, (B) enter into, amend, adopt or terminate any dividendemployment, change of control, severance or retention agreement with any employee of the Company or any of its Subsidiaries (except (1) for the entry into an agreement with an employee who has been hired to replace an employee with such an agreement on terms that are no less favorable to the Company or any of its Subsidiaries than the terms of the employment agreement of the employee who is being replaced or (2) for severance agreements entered into with employees in the ordinary course of business in connection with terminations of employment on the same terms as provided under the Company’s or Subsidiaries’ applicable severance plans and policies or within contracts of employment in effect as of the date hereof), (C) hire any employee or retain any individual independent contractor with annual target cash compensation in excess of $400,000, (D) terminate any director, executive or employee with annual target cash compensation in excess of $400,000, other than for cause, (E) grant to any current or former director, employee or individual independent contractor any equity or equity-based award, or (F) permit any employee to participate in the Company’s Executive Change in Control Severance Plan other than those employees who are participants as of the date of this Agreement;
(iv) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans or advances to any of its executive officers, directors, employees, agents or consultants (other distribution onthan loans or advances in the ordinary course of business consistent with past practice) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, or directly SEC rule or indirectly redeempolicy;
(vi) shall not, purchase and shall not permit any of its Subsidiaries to, adopt any material amendments to its certificate of incorporation or otherwise acquire bylaws or similar applicable charter documents;
(vii) other than transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, the Company shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable Company Option (except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid as otherwise expressly provided by the Company terms of this Agreement or the express terms of any unexercisable options outstanding on its Common the date hereof), other than issuances of Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the respect of any exercise of stock options issued Company Options and settlement of any Company RSU Awards or Company PSU Awards, in each case outstanding as of on the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of thereof;
(viii) except for transactions among the date hereof, Company and (C) its wholly owned Subsidiaries or among the Company’s deferred compensation plans wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of the Company’s (or any Subsidiary’s) capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of Shares from a holder of a Company Equity Award in satisfaction of withholding obligations or in payment of the exercise price in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiarythereof;
(vix) purchaseshall not, selland shall not permit any of its Subsidiaries to, transferincur, mortgageassume, encumber guarantee, prepay or otherwise dispose become liable for or modify the terms of any properties Indebtedness (directly, contingently or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiaryotherwise), except for (A) any indebtedness for borrowed money among the Company and its Subsidiaries or among the Company’s Subsidiaries, (B) any indebtedness under the Company’s and its Subsidiaries’ existing credit and other than encumbrances, acquisitions or dispositions pursuant to Contracts agreements in effect as prior to the execution of this Agreement, together with any other indebtedness, in an aggregate principal amount not to exceed $10,000,000, (C) letters of credit issued under the date Company’s credit agreements in effect prior to the execution of this Agreement and (D) trade payables, capital lease obligations, or obligations issued or assumed as consideration for services or property, including inventory, in each case of (A), (B), (C) and (D), in the ordinary course of business consistent with past practice;
(vix) incurexcept for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, assumeshall not, guaranteeand shall not permit any of its Subsidiaries to, prepay sell, lease, license, transfer, exchange or become obligated with respect swap, mortgage or otherwise encumber (including securitizations), or subject to any indebtedness for borrowed money Lien (other than Permitted Liens) or offerotherwise dispose of any material portion of its properties or material assets, place or arrange any issue including the capital stock of debt securitiesSubsidiaries, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, inventory and non-exclusive licenses in the ordinary course of business consistent with past practice and would not reasonably be expected except pursuant to delay, adversely affect or impede Parent’s ability existing agreements in effect prior to obtain the Financing;
(vii) except as specifically contemplated in execution of this Agreement set forth on Section 5.1(b5.1(b)(x) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other PersonLetter;
(viiixi) make shall not, and shall not permit any acquisition of another Person or businessits Subsidiaries to, whether by purchase (i) enter into any contract that would have been a Company Material Contract of stock or securities or contributions the type referred to capital in excess of $5,000,000 in the aggregateSections 3.18(a)(i), (ii), (iii), (v) (other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practicebusiness), enter into(vi) (other than in the ordinary course of business), renew(vii), extend(ix), amend or terminate (Axi) any Company Material Contract or Contract which if and (xiii) had it been entered into prior to the date hereof would be a of this Agreement or (ii) modify, amend, terminate or waive any material rights under any Company Material Contract or Contract, in each case with respect to this clause (Bii) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary other than in the ordinary course of business consistent with past practicebusiness;
(xii) shall not, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or and shall not permit any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect Subsidiaries to, settle any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceedingAction, other than waivers, releases, assignments, settlements or compromises any Action that involve involves only the payment of monetary damages not in excess of $1,000,000 5,000,000 individually or any obligation or liability of $10,000,000 in the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documentsaggregate;
(xiii) take any action that is intended or would reasonably be expected to result in (A) shall not, and shall not permit any of its Subsidiaries to, (A) acquire or dispose (by merger, consolidation, acquisition or disposition of stock or assets or otherwise) assets from or to any other Person (except for transactions among the conditions to Company and its wholly owned Subsidiaries or among the Merger set forth Company’s wholly owned Subsidiaries) with a value or purchase price in Article VI not being satisfiedexcess of $5,000,000 individually or $10,000,000 in the aggregate, other than acquisitions of merchandise for sale in the Company’s stores, (B) make any loans, advances or capital contributions to, or investments in, any Person (except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries) or (C) merge or consolidate with any other Person or restructure, reorganize or completely or partially liquidate the Company or any of its Subsidiaries;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict except for the businesses expenditures contemplated by and consistent with the capital budgets set forth in Section 5.1(b)(xiv) of the Surviving CorporationCompany Disclosure Letter, shall not, and shall not permit any of its Subsidiaries to, make or its current or future Affiliates following authorize any capital expenditures in excess of $5,000,000 in the Effective Timeaggregate;
(xv) adopt a plan shall not, and shall not permit any of complete its Subsidiaries to, enter into any collective bargaining agreement or partial liquidationany agreement with any labor organization, dissolutiontrade union, mergerlabor association, consolidation, restructuring, recapitalization or other reorganization of such entityemployee representative;
(xvi) implement or adopt shall not, and shall not permit any material change in of its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) Subsidiaries to (A) make, change or revoke rescind any material Tax election, (B) change any material method of reporting for Tax purposesaccounting, (C) file any material amended Tax Return, (D) enter into any closing agreement with respect to a material amount of Taxes, (E) settle or compromise any material Tax claim, audit or disputeproceeding relating to a material amount of Taxes, or (DF) make or surrender any right to claim for a material refund amount of TaxesTax refund, in each case, to the case extent such action would result in a material increase in the Tax liability of each of (C) or (D) the Company and its Subsidiaries in excess of $1,000,000;the amounts reserved therefor on the consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents; and
(xviiixvii) other than shall not, and shall not permit any of its Subsidiaries to, agree, in the ordinary course of business consistent with past practicewriting or otherwise, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.foregoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition Effective Time, (i) Parent and Merger Sub shall not, and shall not permit any of Company the Equity Investors to take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, and (ii) specifically with respect to obtaining applicable approvals and/or termination of applicable waiting periods required to satisfy the consent condition set forth in Section 6.1(c), Parent and Merger Sub shall not, and shall not permit any of their respective HSR Affiliates to take any Officer Shareholder will action that has the effect of, or would reasonably be deemed expected to have the consent effect of, materially delaying or preventing the satisfaction of Parentthe condition set forth in Section 6.1(c).
Appears in 1 contract
Samples: Merger Agreement (Petsmart Inc)
Conduct of Business by the Company and Parent. (a) From and after During the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing (such period, “Effective Time”), each of the Company and Parent shall, except to the Effective Time or extent that the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law other party shall otherwise consent in writing or as expressly required contemplated by this Agreement or as permitted by Section 5.1(b)set forth in Schedule 4.1, (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct carry on its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (B) except where noncompliance would not be reasonably expected to have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use commercially reasonable efforts consistent with past practices and policies to maintain and (i) preserve substantially intact its present business organization and advantageous business relationships and to retain organization, (ii) keep available the services of its present key officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required by the terms of this Agreement and adversely affect except as set forth in Schedule 4.1, without the prior written consent of the other party, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company and Parent shall not do any of the Parties following:
(a) transfer or license to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions person or otherwise materially delay extend, amend or prohibit modify any material rights to any Intellectual Property of the Transactions.Company, or enter into grants to transfer or license to any person future Intellectual Property rights, other than, with respect to the Company in the ordinary course of business consistent with past practices provided that in no event shall the Company license on an exclusive basis or sell any Intellectual Property of the Company;
(b) Without limiting the generality declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of the foregoingany capital stock, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock;
(iic) makeissue, declare deliver, sell, authorize, pledge or pay any dividendotherwise encumber, or make agree to any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberof the foregoing with respect to, any shares of its capital stock or other equity securities or ownership interests or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stockstock or other equity securities or ownership interests, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue stock or other equity securities or ownership interests or any securities convertible into or exchangeable for shares of capital stock except pursuant or other equity securities or other ownership interests, or enter into other agreements or commitments of any character obligating it to (A) the exercise of Company Stock Optionsissue any such shares, (B) the vesting of Company RSUs equity securities or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company ownership interests or another wholly owned Subsidiaryconvertible or exchangeable securities;
(vd) purchase, amend its articles or certificate of incorporation and bylaws (or other comparable governing instruments with different names) (collectively referred to herein as “Charter Documents”);
(e) sell, transferlease, mortgagelicense, encumber or otherwise dispose of any properties or assets having a value in excess assets, except with respect to the Company, (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or inventory in the ordinary course of business consistent with past practice;
, and (viB) incurthe sale, assume, guarantee, prepay lease or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, disposition (other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(bthrough licensing) of the Company Disclosure Scheduleproperty or assets that are not material, make any investment in excess of $5,000,000 individually or in the aggregate, whether by purchase to the business of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Personthe Company;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ixf) except in the ordinary course of business consistent with past practicepractices, enter into, renew, extendmodify, amend or terminate (A) any Company Material Contract material contract, as applicable, or Contract which if entered into prior to waive, delay the date hereof would be a Company Material Contract exercise of, release or (B) assign any Contracts not in the ordinary course, involving the commitment material rights or transfer of value in excess of $1,000,000 in the aggregate in any yearclaims thereunder;
(xg) except enter into any transaction with or distribute or advance any assets or property to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, its officers, directors, consultants partners, stockholders, managers or independent contractors members other than the payment of the Company or any of its Subsidiaries, except for increases in base salary and benefits and tax distributions in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Companypractices; or
(xixh) agree to take in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1 (a) will preclude the fiduciaries of the 401(kthrough (g) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Securities Purchase Agreement (Tremisis Energy Acquisition CORP II)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time Date or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedulewriting by Parent, or (iii) as otherwise consented to may be contemplated or required by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)this Agreement, the Company willcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in such entities shall not take any action except in, the ordinary course of business consistent with past practicepractice and, (B) to the extent consistent therewith, the Company and its Subsidiaries shall use commercially reasonable efforts to maintain and (i) preserve intact its their current business organization and advantageous (ii) preserve their relationships with customers, suppliers and others having business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.dealings with them;
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective TimeDate, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementParent, the Company will not, and will cause each not permit any of its Subsidiaries not to:
(i) adjustamend its articles or certificate of incorporation, splitbylaws, combine partnership or reclassify any capital stock joint venture agreements or otherwise amend other organizational documents (except to the terms of extent required to comply with applicable Law or its capital stockobligations hereunder);
(ii) makecombine or reclassify any shares of its capital stock or declare, declare set aside or pay any dividenddividend or other distribution or redemption (whether in cash, stock or property or any combination thereof) in respect of its capital stock, or make redeem or otherwise acquire any other distribution onof its securities or any securities of its respective Subsidiaries;
(iii) reclassify, combine, split, subdivide or directly or indirectly redeem, purchase or otherwise acquire acquire, directly or indirectly, any of its capital stock, stock options or debt securities;
(iv) except as required by Company Benefit Plans, (A) (1) increase the compensation or other benefits payable or provided to directors or executive officers of the Company or, (2) except in the ordinary course of business consistent with past practice, increase the compensation or other benefits payable or provided to employees who are not directors or executive officers of the Company, (B) enter into any employment, change of control, severance or retention agreement with any employee of the Company or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or 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, except as would not result in a material increase in cost to the Company;
(v) change any of its financial accounting policies or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vi) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement) other than (A) for dividends paid by issuances of shares of Company Common Stock in respect of any direct or indirect wholly owned Subsidiary to the exercise of Company or to any other direct or indirect wholly owned SubsidiaryStock Options, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises sale of shares of Company Common Stock pursuant to the exercise of stock options issued and outstanding as to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of the date hereof under the Company Stock PlansTaxes;
(iiivii) grant any Person any right to directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stockstock or any rights, warrants or options to acquire any such shares;
(ivviii) issue incur, assume, guarantee, prepay or otherwise become liable for any shares indebtedness for borrowed money (directly, contingently or otherwise), except for indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money on materially no less favorable terms.
(ix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than the Company Permitted Liens) or otherwise dispose of any properties or assets, including any capital stock of Subsidiaries, except pursuant in the ordinary course of business consistent with past practice or as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby, subject to the limitations of Section 5.5(b);
(x) alter, modify, amend, terminate, waive any rights or exercise any option under any Company Material Contract in any material respect in a manner which is adverse to the Company;
(xi) enter into any Company Material Contracts other than in the ordinary course of business consistent with past practice or enter into any collective bargaining agreement;
(A) the exercise of Company Stock Optionsmake, change or revoke any Tax election, (B) file any amended Tax Return, (C) settle or compromise any liability for Taxes or surrender any claim for a refund of Taxes, other than in the vesting case of Company RSUs clauses (B) and (C) hereof in respect of any Taxes that have been identified in the reserves for Taxes in the Company’s GAAP financial statements included in the Company’s SEC Documents, (D) change any accounting method, practice or Company Performance Sharespolicy in respect of Taxes except as required by applicable Law, granted under (E) prepare any Tax Returns in a manner which is not consistent in all material respects with the past practice of the Company Stock Plans and outstanding its Subsidiaries with respect to the treatment of items on such Tax Returns, or (F) incur any liability for Taxes other than in the ordinary course of business (including as a result of the operation of the business in the ordinary course);
(xiii) make any capital expenditure, financing or expenditures which (i) involves the purchase of real property or (ii) is in excess of $5,000 individually or $20,000 in the aggregate, other than capital expenditures pursuant to contracts entered into prior to the date hereof (all of which contracts are listed in Section 3.19 of the Company Disclosure Schedule);
(xiv) acquire, sell, lease or dispose of any assets outside the ordinary course of business;
(xv) acquire, directly or indirectly (A) by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other manner, any person or division, business or equity interest of any person or (B) except in the ordinary course of business consistent with past practice, any assets;
(xvi) make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or loan or advance (other than travel and similar advances to its employees in the ordinary course of business consistent with past practice) to, any person;
(xvii) pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in accordance with the terms of such instruments as of liabilities, claims or obligations reflected or reserved against in the date hereof, and most recent consolidated financial statements (Cor the notes thereto) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to included in the Company SEC Documents or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of incurred since the date of this Agreement or such financial statements in the ordinary course of business consistent with past practice;
(vixviii) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claimlitigation, action proceeding or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of investigation material to the Company in excess of such amountand its Subsidiaries taken as a whole;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xvxix) adopt a plan of complete or partial liquidation, liquidation or resolutions providing for or authorizing such liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or other reorganization reorganization, unless required by Law, administrative order or the terms of such entitythis transaction;
(xvixx) implement reduce the prices of products sold or adopt services performed for customers except in the ordinary course of business;
(xxi) modify in any material change in its Tax respects any current investment policies or financial accounting principlesinvestment practices, practices or methods, other than except as may be required by GAAP or to accommodate changes in applicable Law;
(xviixxii) (A) make, change enter into any transaction or revoke take any material Tax election, (B) change action or fail to take any method action which would result in any of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, the representations and warranties contained in the case of each of (C) or (D) in excess of $1,000,000this Agreement not being true and correct;
(xviiixxiii) take any action or permit any other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Companyaction to occur which might have a Company Material Adverse Effect; or
(xixxxiv) agree to take agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes The Company agrees with Parent, on behalf of this Section 5.1 itself and its Subsidiaries, that between the date hereof and the definition Effective Date, the Company and its Subsidiaries will take the actions, and will refrain from taking the actions (as the case may be), listed on Exhibit C hereto, as set forth thereon and in full cooperation with Parent.
(d) Parent agrees with the Company, on behalf of Company itself and its Subsidiaries, that, between the date hereof and the Effective Date, Parent shall not, and shall not permit any of its Subsidiaries to take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Biotel Inc.)
Conduct of Business by the Company and Parent. (a) From and after Except as set forth in Schedule 4.1 hereto, during the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each of the Company, its Subsidiaries, and Parent and Merger Sub shall, except to the Effective Time or extent that the dateother party shall otherwise consent in writing, if any, carry on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (B) except where noncompliance would not have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to maintain and (i) preserve substantially intact its present business organization and advantageous business relationships and to retain organization, (ii) keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement or set forth in Schedule 4.1 hereto, without the prior written consent of the other party, during the period from the date of this Agreement and adversely affect continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company, its Subsidiaries and Parent and Merger Sub shall not do any of the Parties to obtain following:
(a) Waive any necessary approvals stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any regulatory agency employee, consultant, director or other Governmental Entity required stock plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting Grant any severance or termination pay to any officer or employee outside the generality ordinary course of the foregoingbusiness except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the Effective Timeother party, except or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(ic) as set forth in Section 5.1(b) Transfer or license to any person or otherwise extend, amend or modify any material rights to any Intellectual Property of the Company Disclosure ScheduleCompany, its Subsidiaries or Parent, as applicable, or enter into grants to transfer or license to any person future patent rights, other than in the ordinary course of business consistent with past practices provided that in no event shall the Company, its Subsidiaries or Parent license on an exclusive basis or sell any Intellectual Property of the Company, its Subsidiaries or Parent as applicable;
(iid) as Parent may consent in writing (which consent, Except with respect to the Warrant Exchange Offer, declare, set aside or pay any matter referred to dividends on or make any other distributions (whether in items (v)cash, (vii)stock, (viii), (ix), (x), (xi), (xviiiequity securities or property) and (xix) (with in respect to of any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned capital stock or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock; provided that, prior to the Closing, the Company may declare and pay a cash dividend in an amount not to exceed $15,000,000 to the holders of shares of Company Common Stock (the “Company Dividend”);
(iie) makeExcept as provided in Section 5.23, declare purchase, redeem or pay any dividendotherwise acquire, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of capital stock of the Company, its Subsidiaries or Parent, as applicable;
(f) Except with respect to the Warrant Exchange Offer, issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock or any securities convertible into or exchangeable for shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible or exchangeable securities;
(ivg) issue Amend its Charter Documents except that Merger Sub may amend its Charter Documents to change its name to “SAExploration Sub, Inc.;”
(h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs equity interest in or Company Performance Shares, granted under the Company Stock Plans and outstanding as a portion of the date hereof and assets 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 which are material, individually or in accordance with the terms aggregate, to the business of such instruments as of the date hereofParent, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiaryits Subsidiaries as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict such party’s ability to compete or to offer or sell any products or services. For purposes of this paragraph, “material” includes the requirement that, as a result of such transaction, financial statements of the acquired, merged or consolidated entity be included in the Proxy Statement/Information Statement (as defined in Section 5.1);
(vi) purchaseSell, selllease, transfer, mortgagelicense, encumber or otherwise dispose of any properties or assets having a value in excess assets, except (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary)inventory and property, other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice plant and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except equipment in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or and (B) any Contracts the sale, lease or disposition (other than through licensing) of property or assets that are not material, individually or in the ordinary courseaggregate, involving to the commitment or transfer business of value in excess of $1,000,000 in the aggregate in any yearsuch party;
(xj) except Except with respect to Parent as permitted pursuant to Section 5.21 and with respect to the extent required by Law Company pursuant to Section 5.24, incur any indebtedness for borrowed money or guarantee any Company Benefit Plan in effect as such indebtedness of the date hereofanother Person or Persons, (A) increase in issue or sell any manner the compensation debt securities or benefits options, warrants, calls or other rights to acquire any debt securities of any employeesParent, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases as applicable, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing;
(k) Other than the new employment agreements in base salary form and substance mutually satisfactory to Parent and the Company to be executed prior to the Closing between Parent and/or the Company’s Subsidiaries and those individuals listed in Schedule 6.3(f), adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practicepractice with employees who are terminable “at will”), (B) pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or retirement benefits to any employees, indemnification) of its directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practiceemployees or consultants, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practicepractices;
(l) Pay, waive, release, assigndischarge, settle or compromise satisfy any claimclaims, action liabilities or proceedingobligations (absolute, other than waiversaccrued, releasesasserted or unasserted, assignmentscontingent or otherwise), settlements or compromises that involve only the payment of monetary damages litigation (whether or not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions commenced prior to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses date of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviiithis Agreement) other than the payment, discharge, settlement or satisfaction of claims, obligations or litigations in the ordinary course of business consistent with past practicepractices or in accordance with their terms, or liabilities recognized or disclosed in the Unaudited Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred since the date of such financial statements;
(m) Waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is a party or of which Parent is a beneficiary, as applicable;
(n) Except in the ordinary course of business consistent with past practices, modify, amend or terminate any Material Company Contract or Parent Contract, as applicable, or waive, delay the exercise of, release or assign any material rights or claims thereunder;
(o) Except as required by U.S. GAAP or as set forth in Schedule 4.1(o), revalue any of its assets or make any change in accounting methods, principles or practices;
(p) Except in the ordinary course of business consistent with past practices, incur or enter into any newagreement, contract or commitment (i) requiring such party to pay in excess of $5,000,000 in any 12 month period or (ii) with a customer for services in excess of $50,000,000 in any 12 month period;
(q) Settle any litigation where the consideration given is other than monetary or to which an Insider is a party;
(r) Make or rescind any Tax elections that, individually or in the aggregate, could be reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any material income tax liability or, except as required by applicable law, materially amend change any method of accounting for Tax purposes or otherwise materially alter prepare or file any currentTax Return in a manner inconsistent with past practice;
(s) Form, agreement establish or obligations acquire any subsidiary except as contemplated by this Agreement;
(t) Permit any Person to exercise any of its discretionary rights under any Plan to provide for the automatic acceleration of any outstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans;
(u) Make capital expenditures in excess of $50,000,000 in the aggregate;
(v) Make or omit to take any action which would be reasonably anticipated to have a Material Adverse Effect;
(w) Enter into any transaction with or distribute or advance any Affiliate assets or property to any of its officers, directors, partners, stockholders or other Affiliates other than the Companypayment of salary and benefits in the ordinary course of business consistent with prior practice or, in the case of Parent, advancement or reimbursement of expenses in connection with Parent’s search for a business combination; or
(xixx) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1(a) will preclude the fiduciaries of the 401(kthrough (w) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Trio Merger Corp.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed in Section 5.1(a) with the prior written consent of the Company Disclosure ScheduleParent, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), (iii) as expressly contemplated or permitted by this Agreement or (iv) as disclosed in Section 5.1 of the Company Disclosure Schedule, the Company willshall, and will shall cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practicepractices, (B) and use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous significant business relationships and to retain the services of its key officers and key employees; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 5.1 shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. In the event that (i) the Company requests the written consent of Parent to take any action otherwise prohibited by this Section 5.1 and (Cii) take no action which would materially and adversely affect Parent does not grant such consent, any fact, circumstance, event, change, effect or delay occurrence resulting directly from the ability of any failure of the Parties Company to obtain any necessary approvals be able to take such action as result of any regulatory agency the failure of Parent to grant its written consent shall not constitute, or other Governmental Entity required for be considered in determining the Transactions existence or otherwise materially delay or prohibit the Transactionsoccurrence of, a Company Material Adverse Effect.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent consented to in writing by Parent (which consent, with respect such consent not to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will shall not, and will cause each shall not permit any of its Subsidiaries not to, without the prior written consent of Parent:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises or similar transactions pursuant to the exercise of stock options or other awards issued and outstanding as of the date hereof under the Company Stock PlansPlans or permitted hereunder to be granted after the date hereof; provided, that this Section 5.1(b)(ii) shall not apply to (A) dividends or distributions paid by wholly-owned Subsidiaries of the Company to the Company or to other wholly-owned Subsidiaries or (B) dividends or distributions paid by Subsidiaries of the Company, other than wholly-owned Subsidiaries, that are not within the discretion of the Company or its Subsidiaries;
(iii) grant any Person person any right to acquire any shares of its capital stockstock except as required under any existing agreement;
(iv) issue any additional shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs stock options or Company Performance Shares, granted other awards issued under the Company Stock Plans issued and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereofinstruments; provided, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of that the Company to shall not issue any Shares under the Company or another wholly owned SubsidiaryStock Purchase Plan;
(v) except for hedging agreements entered into in the ordinary course of business consistent with past practice, purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 $ 5,000,000 in the aggregate to aggregate;
(vi) make any Person capital expenditures in any fiscal quarter exceeding the Company’s capital expenditure budget for such fiscal quarter by more than 1%; provided, that any capital expenditures contemplated by the Company’s capital expenditure budget for any fiscal quarter not made such fiscal quarter may be made in the fiscal quarter immediately following such fiscal quarter;
(vii) other than to a wholly owned Subsidiary)in connection with guarantees, other than encumbrancessurety bonds, acquisitions security time deposits and customs bonds in the ordinary course of business consistent with past practice or dispositions pursuant to Contracts in effect as connection with drawdowns and issuances of the date letters of this Agreement or credit under existing credit facilities in the ordinary course of business consistent with past practice;
(vi) , incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingmoney;
(viiviii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment acquisition of another Person or business in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities ofsecurities, contributions to capital to, or purchase of any property or assets of any (other Person;
than (viiiA) make any acquisition of another Person or business, whether by purchase of stock or securities or capital contributions to wholly-owned Subsidiaries of the Company and (B) capital in excess contributions to Subsidiaries of $5,000,000 in the aggregateCompany, other than acquisitions pursuant to Contracts in effect as wholly--owned Subsidiaries, that are not within the discretion of the date of this AgreementCompany or its Subsidiaries), property transfers, or entering into binding agreements with respect to any such investment or acquisition;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, materially amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract, in each case, other than any Contract or relating to indebtedness that would not be prohibited under clause (Bvii) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any yearthis Section 5.1(b);
(x) except to the extent required by Law or any Company Benefit Plan by Contracts in effect existence as of the date hereof, (A) increase in any manner the compensation or benefits of any of its present or former employees, officers, directors, consultants or consultants, independent contractors or service providers except in the ordinary course of business consistent with past practice (including, for this purpose, the Company normal employee salary, bonus and equity compensation review process conducted each year), (B) pay any pension, severance or retirement benefits not required by any of its Subsidiariesexisting plan or agreement to any such present or former employees, except for increases in base salary directors, consultants, independent contractors or service providers, (C) other than in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make commit itself to any commitment compensation or benefit plan, program, policy, arrangement or agreement including any pension, retirement, profit-sharing, bonus or other employee benefit or welfare benefit plan, policy, arrangement or agreement or employment, consulting or collective bargaining agreement with or for the benefit of any present or former employee, director, consultant or service provider (other than amendments that do not materially increase the cost to do the Company or any of its Subsidiaries of maintaining such plan, policy, arrangement or agreement), (D) accelerate the foregoingvesting of, or the lapsing of restrictions with respect to, any stock options or other stock-based compensation, (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 Company Benefit Plan, or (F) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company 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 applicable Law;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises not exceeding the amount reserved against in the financial statements contained in the Company SEC Documents, or that involve only the payment of monetary damages not in excess of $1,000,000 1,250,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any obligation claims, liabilities or liability of the Company obligations in excess of such amount, in each case, other than in the ordinary course consistent with past practice;
(xii) amend or waive any provision of its articles of incorporation and bylaws or other equivalent organizational documents or, in the Charter Documentscase of the Company, enter into any agreement with any of its shareholders in their capacity as such;
(xiii) take or omit to take any action that is intended or would reasonably be expected to to, individually or in the aggregate, result in any of the conditions to the Merger set forth in Article VI not being satisfiedsatisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
(xiv) enter into any “non-compete”, “non-solicit” or similar agreement that would materially restrict the businesses of the Surviving Corporation, Corporation or its Subsidiaries or its current their ability to solicit customers or future Affiliates employees following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP GAAP, applicable Law or applicable Lawregulatory guidelines;
(xvii) (A) enter into any closing agreement with respect to material Taxes, settle or compromise any material liability for Taxes, make, revoke or change or revoke any material Tax election, (B) change agree to any method adjustment of reporting for Tax purposes, (C) settle or compromise any material Tax claimattribute, audit or dispute, or (D) make file or surrender any claim for a material refund of Taxes, in execute or consent to any waivers extending the case statutory period of each limitations with respect to the collection or assessment of (C) material Taxes, file any material amended Tax Return or (D) in excess of $1,000,000obtain any material Tax ruling;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement Affiliate Transaction or obligations transaction which would be an Affiliate Transaction if such transaction occurred prior to the date hereof;
(xix) make any loans to any individual (other than advances of out-of-pocket business expenses to employees, contractors or consultants in the ordinary course of business and consistent with past practices) or make any Affiliate material loans, advances or capital contributions to, or investments in, any other Person in excess of $3,000,000 in the aggregate for all such loans, advances, contributions and investments, except for (i) transactions solely among the Company and/or wholly-owned Subsidiaries of the Company, or (ii) as required by existing contracts set forth in Section 5.1(b)(xix) of the Company Disclosure Schedule; or
(xixxx) agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Egl Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be contemplated or required by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Schedule, the Company will, covenants and will cause each of its Subsidiaries to agrees with Parent that (A) conduct the business of the Company and its business in all material respects in Subsidiaries shall be conducted in, and such entities shall not take any action except in, the ordinary course consistent with past practiceof business, and (B) the Company and its Subsidiaries shall use commercially reasonable efforts to maintain and preserve intact its their present business organization and advantageous business relationships organizations and to retain the services of its key officers preserve their relationships with significant customers, suppliers, licensors, licensees and key employees, and (C) take no action others with which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsthey have business dealings.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except (A) dividends and distributions paid or made by its directly or indirectly wholly owned Subsidiaries in the ordinary course of business and (B) that the Company may continue to pay regular quarterly cash dividends on the Company Common Stock consistent with past practice (not to exceed $0.37 per share per quarter);
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) except as required by (x) existing written agreements or Company Benefit Plans, or (y) as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to the Company’s directors, executive officers, publishers, or any other individual who has entered into an agreement with the Company that provides change in control and/or severance protection by more than 5% from the level at which such compensation or another wholly owned Subsidiarybenefits were payable immediately prior to the date of this Agreement, (B) increase the compensation or benefits payable to any employee of the Company except as in accordance with the ordinary course of business and consistent with past practice, (C) enter into any employment, consulting, special retirement, change of control, separation, severance or retention agreement with any employee of the Company (provided that the Company may enter into individual agreements in accordance with the ordinary course of business and consistent with past practice that provide for payments not in excess of $250,000 per individual and provided further that the total aggregate payments under all such agreements shall not exceed $2,500,000), (D) except as permitted pursuant to clause (B) above, establish, adopt, enter into or amend any Company Benefit Plan, 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, except, in each case, as would not result in a material increase in cost to the Company, or (E) hire, promote, demote or otherwise change the employment status (e.g., part-time, full-time, leave), title or other material term or material condition of employment of any individual who is (or would become after such hiring, promotion, demotion or change) a publisher or executive editor; provided, however, that notwithstanding the foregoing, Parent and the Company agree to cooperate in good faith to jointly design and the Company shall establish a program for the payment of “stay bonuses” to be established in accordance with the provisions outlined in Section 5.1(b)(iii) of the Company Disclosure Schedule;
(iv) shall not, and shall not permit any of its Subsidiaries to, (x) agree to labor or employment arbitration awards or settlements resulting in total payments of more than $300,000 or (y) agree in a labor arbitration or settlement to a work condition that would set a precedent adversely affecting the business of the Company;
(v) purchaseshall not, selland shall not permit any of its Subsidiaries to, transferengage in bargaining with any union representing any employees of the Company or its Subsidiaries, mortgageexcept bargaining that is done after notice to and consultation with Parent;
(vi) shall not, encumber and shall not permit any of its Subsidiaries to, enter into or otherwise dispose of make any properties loans or assets having a value in excess of $1,000,000 in the aggregate advances to any Person of its officers, directors, employees, agents or consultants (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions loans or dispositions pursuant to Contracts in effect as of the date of this Agreement or advances in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to make any indebtedness change in its existing borrowing or lending arrangements for borrowed money or offer, place or arrange any issue on behalf of debt securities, other than any of such persons, except as required by the foregoing that is pursuant to working capital borrowings or letter terms of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingany Company Benefit Plan;
(vii) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedulerequired by GAAP, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock SEC rule or securities of, contributions to capital to, policy or purchase of any property or assets of any other Personapplicable Law;
(viii) make shall not, and shall not permit any acquisition of another Person its Subsidiaries to, adopt any material amendments to its articles of incorporation or business, whether by purchase of stock by-laws or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreementsimilar applicable charter documents;
(ix) except in for transactions among the ordinary course Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of business consistent with past practice, enter into, renew, extend, amend or terminate its Subsidiaries to,
(A) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any Company Material Contract shares of its capital stock or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not other ownership interest in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company Subsidiaries or any of its Subsidiariessecurities convertible into or exchangeable for any such shares or ownership interest, except or any rights, warrants or options to acquire or with respect to officersany such shares of capital stock, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, ownership interest or the lapsing of forfeiture restrictions convertible or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;exchangeable securities,
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiiiB) take any action that is intended to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or would reasonably be expected to result in the express terms of any of unexercisable options outstanding on the conditions to the Merger set forth in Article VI not being satisfied;date hereof), or
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise issue any material Tax claimequity-based compensation awards, audit or disputewhether settled in stock, cash, or (D) make or surrender any claim for a material refund of Taxesotherwise, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.than
Appears in 1 contract
Samples: Merger Agreement (McClatchy Co)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayed)conditioned) or (iii) as expressly required or permitted by this Agreement, the Company will, covenants and will cause each agrees with Parent that the business of the Company and its Subsidiaries to (A) conduct its business in all material respects shall be conducted in the ordinary course of business consistent with past practice; provided, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employeeshowever, and (C) take that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without Subject to the exceptions contained in clauses (i) through (iii) of Section 5.1(a) and without limiting the generality of Section 5.1(a), the foregoingCompany agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) earlier of the Company Disclosure ScheduleEffective Time and the Termination Date, (ii) as without the prior written consent of Parent may consent in writing (which consent, with respect to any matter referred to other than in items the case of clauses (vi), (vii), (viiiii), (ix), (x), (xi), (xii), (xvi), (xvii), (xviii) and (xixxxi) (and, with respect to any of the foregoing enumerated items) belowall such clauses, clause (xxii), shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, split, combine or reclassify and shall not permit any capital stock or otherwise amend the terms of its capital stock;
(ii) makeSubsidiaries to, declare authorize or pay any dividend, dividends on or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of with respect to its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise whether in cash, assets, stock or other securities of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans or its Subsidiaries), except dividends and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares distributions paid by a wholly owned Subsidiary Subsidiaries of the Company to the Company or another any of its wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilitiesSubsidiaries, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingpractice;
(viiii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any of its capital stock, equity interests or other securities in respect of, in lieu of or in substitution for shares of its capital stock or equity interests, except pursuant to the ESPP in accordance with Section 2.4 or in connection with the exercise or settlement of Company Equity Awards, and 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) except as specifically contemplated in Section 5.1(b) required by existing written agreements or Company Benefit Plans, shall not, and shall not permit any of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions its Subsidiaries to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ixA) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend increase the compensation or terminate (A) any Company Material Contract other benefits payable or Contract which if entered into prior provided to the date hereof would be a Company Material Contract Company’s directors, executive officers or employees, or (B) enter into any Contracts not material employment, change of control, severance or material retention agreements with any employee of the Company or any of its Subsidiaries (except (1) for an agreement with an employee who has been hired to replace an employee with such an agreement, (2) for severance agreements entered into with employees in the ordinary coursecourse of business in connection with terminations of employment, involving or (3) for employment agreements terminable on no more than 60 days’ notice without penalty);
(iv) shall not enter into any collective bargaining agreement or any material agreement with any labor organization, works council, trade union, labor association, or other employee representative, except as required by applicable Law;
(v) shall not implement any facility closings or employee layoffs that do not comply with the commitment WARN Act;
(vi) shall not, and shall not permit any of its Subsidiaries to, enter into or transfer make any loans or advances to any of value in excess of $1,000,000 its executive officers, directors, employees, agents or consultants (other than loans or advances to officers, directors and employees in the aggregate ordinary course of business consistent with past practice) or make any change in its existing borrowing or lending arrangements for or on behalf of any yearof such Persons, except with respect to officers, directors and employees as required by the terms of any Company Benefit Plan;
(vii) shall not, and shall not permit any of its Subsidiaries to, materially change accounting policies or procedures or any of its methods of reporting income, deductions or other material items for accounting purposes, except as required by GAAP, SEC rules or interpretations, or local statutory requirements prescribed by applicable international financial reporting standards;
(viii) shall not adopt, and shall not permit any of its Subsidiaries to adopt, any amendments to its certificate of incorporation or bylaws or similar applicable charter or governing documents (including partnership agreements and limited liability company agreements);
(ix) except for transactions among the Company and its wholly–owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber or otherwise subject to a Lien (other than a Permitted Lien), or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other equity interest in the Company or any Subsidiaries or any securities convertible into or exchangeable or exercisable 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 or take any action to cause to be exercisable any otherwise unexercisable Company Option (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than issuances of shares of Common Stock in respect of any exercise of Company Options, exercise of options (as such term is used in the ESPP) under the ESPP in accordance with Section 2.4, and settlement of any Company RSU Awards in each case outstanding on the date hereof;
(x) shall not, and shall not permit its Subsidiaries to, directly or indirectly, purchase, redeem, or otherwise acquire any shares of its capital stock or any rights, warrants, or options to acquire any such shares except for (A) pre-funded transactions in connection with the Company’s accelerated stock repurchase program publicly announced October 31, 2012, (B) repurchases disclosed on Section 5.1(b)(x) of the Company Disclosure Letter in the dollar and share amounts specified on Section 5.1(b)(x) of the Company Disclosure Letter, (C) the acquisition of shares of Common Stock from a holder of a Company Option or Company RSU Award in satisfaction of withholding obligations or in payment of the exercise price, (D) subject to Section 2.4, the acquisition of shares of Common Stock pursuant to the extent required by Law or any Company Benefit Plan terms of the ESPP as in effect as of the date hereof, or (E) the acquisition or deemed acquisition of shares of Common Stock of the Company in connection with forfeitures of Company Options;
(xi) shall not, and shall not permit any of its Subsidiaries to, incur, offer, place, arrange, syndicate, assume, guarantee, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise), except for (A) increase any Indebtedness among the Company and its Subsidiaries or among the Company’s Subsidiaries, (B) guarantees by the Company of Indebtedness of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 5.1(b), (C) capital leases entered into by the Company and its Subsidiaries in the ordinary course of business and (D) Indebtedness (to the extent characterized as Indebtedness) relating to receivables financing entered into by the Company and its Subsidiaries in the ordinary course of business;
(xii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, assign, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any manner the compensation Lien (other than Permitted Liens) or benefits otherwise dispose of any employees, officers, directors, consultants or independent contractors of the Company or any material portion of its material properties or assets, including any capital stock of Subsidiaries, except for increases in base salary other than (A) inventory, obsolete assets and customer receivables in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits pursuant to any employees, directors, consultants or independent contractors existing agreements in effect prior to the execution of this Agreement set forth on Section 5.1(b)(xii) of the Company Disclosure Letter or (C) licenses of the Company Products in the ordinary course of business;
(xiii) shall not, and shall not permit any of its SubsidiariesSubsidiaries to (A) modify, except with amend, terminate or waive any rights or claims under any Company Material Contract or Principal Lease in any material respect in a manner which is adverse to officers, directors and consultants the Company other than in the ordinary course of business consistent with past practice, or (CB) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, enter into any equity or equity-based awards, new agreement that (Dx) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be have been considered a Company Benefit Plan Material Contract if in effect on it were entered into prior to the date hereof or (F) enter intohereof, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except other than in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not (y) contains a change in excess of $1,000,000 or any obligation or liability control provision in favor of the Company other party or parties thereto that would require a material payment to or give rise to any material rights to such other party or parties in excess of such amount;
(xii) amend or waive any provision connection with the consummation of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfiedMerger;
(xiv) enter into shall not, and shall not permit any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidationto, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change file any method income or other material amended Tax Return that would reasonably be expected to have the effect of reporting for increasing the Tax purposesliability of the Company or any of its Subsidiaries, (C) adopt or change any material method of Tax accounting or change any annual Tax accounting period, (D) settle or compromise any material Tax claimproceeding or assessment, audit (E) enter into any “closing agreement” within the meaning of Code Section 7121 (or disputeany predecessor provision or similar provision of state, local or foreign law) with respect to Taxes, (DF) make or surrender any right to claim for a material refund of Taxes, (G) seek any Tax ruling from any taxing authority, or (H) consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment other than extensions consented to in the case ordinary course of each business and consistent with past practice of the Company and its Subsidiaries in filing their respective Tax Returns;
(Cxv) shall not, and shall not permit any of its Subsidiaries to, voluntarily settle, pay, discharge or (D) satisfy any Action, other than any Action that involves only the payment of monetary damages not in excess of $1,000,0001,000,000 individually or $5,000,000 in the aggregate (provided, in no event shall the Company or any of its Subsidiaries be prevented from paying, discharging or satisfying (with prior notice to Parent if practicable) any judgment and the amount of any such payment, discharge or satisfaction shall not be included in the foregoing dollar threshold), except to the extent (and in no event exceeding the amount) reserved against in the Company’s consolidated balance sheet as of December 31, 2012 included in the Company SEC Documents in respect of the claim being settled (such reserves, in the aggregate, are approximately $7,000,000);
(xvi) except as set forth in Section 5.1(b)(xvii) of the Company Disclosure Letter, shall not, and shall not permit any of its Subsidiaries to, adopt any plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring or other reorganization of the Company or any of its Subsidiaries (other than the Merger);
(xvii) except as set forth on Section 5.1(b)(xvii) of the Company Disclosure Letter, shall not, and shall not permit any of its Subsidiaries to, (A) acquire (by merger, consolidation, acquisition of stock or assets or otherwise) (I) any corporation, partnership or other business organization or (II) any assets from any other Person (excluding ordinary course purchases of goods, products and off-the-shelf Intellectual Property), or (B) make any material capital contributions or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company);
(xviii) shall not, and shall not permit any of its Subsidiaries to, make or authorize any capital expenditure in excess of $2,000,000 individually or in the aggregate, other than any capital expenditure (or series of related capital expenditures) consistent in all material respects with the capital expenditure budget of the Company for the fiscal year ending March 31, 2014 (a copy of which has been previously provided to Parent);
(xix) shall not, and shall not permit any of its Subsidiaries to, sell, assign, transfer, convey, license (as licensor) or otherwise dispose of any material Company Intellectual Property, except for non-exclusive licenses of Intellectual Property granted to customers of the Company that are entered into in the ordinary course of business consistent with past practice;
(xx) shall not, and shall not permit any of its Subsidiaries to, disclose any material trade secrets of the Company of any of its Subsidiaries other than pursuant to agreements entered into in the ordinary course of business consistent with past practice that contain confidentiality undertakings with respect to such confidential information and trade secrets;
(xxi) shall not, and shall not permit any of its Subsidiaries to, enter into or amend any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the CompanyInterested Party Transaction; orand
(xixxxii) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, authorize or make any commitment commitment, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition earlier of Company Material Adverse Effectthe Effective Time and the Termination Date, Parent and Merger Sub shall not, and shall not permit any of the consent Guarantors or any of their Subsidiaries or controlling or controlled HSR Affiliates to, hold or agree to hold five percent (5%) or greater of the voting securities (as “hold” and “voting securities” are defined under 16 CFR 801) of any Officer Shareholder will be deemed Person identified on Section 5.1(c) of the consent Company Disclosure Letter (provided that, with respect to any Guarantor, “HSR Affiliate” shall mean an “Affiliate” or “Associate” (each as defined in 16 CFR 801.1(d)) of Parentsuch Guarantor).
Appears in 1 contract
Samples: Merger Agreement (BMC Software Inc)
Conduct of Business by the Company and Parent. (a) From and after During the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each of the Company, the Stockholder, Parent and the Merger Sub shall, except to the Effective Time or extent that the dateother party shall otherwise consent in writing, if any, carry on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (except where noncompliance would not have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its best efforts consistent with past practices and policies to (i) preserve substantially intact its present business organization, (Bii) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement, without the prior written consent of the other party, during the period from the date of this Agreement and adversely affect continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company, the Stockholder, Parent and the Merger Sub shall not do any of the Parties to obtain following:
(a) Waive any necessary approvals stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any regulatory agency employee, consultant, director or other Governmental Entity required stock plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting the generality of the foregoingGrant any severance or termination pay to any officer or employee except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the Effective Timeother party, except or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(ic) as set forth in Section 5.1(b) Transfer or license to any person or otherwise extend, amend or modify any material rights to any Intellectual Property of the Company Disclosure Scheduleor Parent, (ii) as Parent may consent in writing (which consentapplicable, with respect or enter into grants to transfer or license to any matter referred to person future patent rights, other than in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (the ordinary course of business consistent with respect to past practices provided that in no event shall the Company or Parent license on an exclusive basis or sell any Intellectual Property of the foregoing enumerated items) belowCompany, shall not be unreasonably withheld, conditioned or delayed) or (iii) Parent as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:applicable;
(id) adjustDeclare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock; provided, however, that AAI shall be permitted to make distributions of Stub Period Tax Amounts to the Stockholder and Lim in accordance with Section 1.15;
(iie) makePurchase, declare redeem or pay any dividendotherwise acquire, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of its capital stock of the Company and Parent, as applicable, including repurchases of unvested shares at cost in connection with the termination of the relationship with any employee or consultant pursuant to agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock or any securities convertible into or exchangeable for shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible or exchangeable securities;
(ivg) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned SubsidiaryAmend its Charter Documents;
(vh) purchaseAcquire or agree to acquire by merging or consolidating with, sellor by purchasing any equity interest in or a portion of the assets of, transferor by any other manner, mortgageany business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of Parent or the Company as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict such party’s ability to compete or to offer or sell any products or services;
(i) Sell, lease, license, encumber or otherwise dispose of any properties or assets having a value in excess assets, except (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except inventory in the ordinary course of business consistent with past practice, and (B) the sale, lease or disposition (other than through licensing) of property or assets that are not material, individually or in the aggregate, to the business of such party;
(j) Except as disclosed in Schedule 2.22 and except for borrowing under the Company’s existing credit facilities in the ordinary course of business or any new borrowing arrangements entered into by the Company for the purpose of operating the business in the ordinary course or replacing currently existing mezzanine borrowing in the approximate amount of $15 million with C3 Capital Partners and syndicated lenders, incur any indebtedness for borrowed money in excess of $25,000 in the aggregate or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Parent or the Company, as applicable, enter intointo any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, renewnor shall the Company modify or terminate any of its existing credit facilities;
(k) Adopt or amend any employee benefit plan, extendpolicy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable “at will”), pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants, except in the ordinary course of business consistent with past practices;
(l) Pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practices or in accordance with their terms, or liabilities recognized or disclosed in the Stub Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred since the date of such financial statements, or waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is a party or of which Parent is a beneficiary, as applicable;
(m) Except in the ordinary course of business consistent with past practices, modify, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to Parent Contract, as applicable, or waive, delay the date hereof would be a Company Material Contract exercise of, release or assign any material rights or claims thereunder;
(Bn) Except as required by U.S. GAAP, revalue any Contracts not of its assets or make any change in accounting methods, principles or practices;
(o) Except in the ordinary coursecourse of business consistent with past practices, involving the incur or enter into any agreement, contract or commitment or transfer of value requiring such party to pay in excess of $1,000,000 in the aggregate 100,000 in any year12 month period;
(xp) Engage in any action that could reasonably be expected to cause the Merger or any Canada Acquisition to fail to qualify as a “reorganization” under Section 368(a) of the Code;
(q) Settle any litigation to which an Insider is a party or where the consideration given by the Company is other than monetary;
(r) Make or rescind any Tax elections that, individually or in the aggregate, could be reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any material income tax liability or, except to the extent as required by Law applicable law, materially change any method of accounting for Tax purposes or prepare or file any Company Benefit Return in a manner inconsistent with past practice;
(s) Form, establish or acquire any subsidiary except as contemplated by this Agreement;
(t) Permit any Person to exercise any of its discretionary rights under any Plan in effect as of to provide for the date hereof, (A) increase in any manner the compensation or benefits automatic acceleration of any employeesoutstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans;
(u) Make capital expenditures except in accordance with prudent business and operational practices consistent with prior practice;
(v) Make or omit to take any action which would be reasonably anticipated to have a Material Adverse Effect;
(w) Except as disclosed in Schedule 2.22, enter into any transaction with or distribute or advance any assets or property to any of its officers, directors, consultants partners, stockholders or independent contractors other affiliates other than the payment of the Company or any of its Subsidiaries, except for increases in base salary and benefits in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xixx) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1 (a) will preclude the fiduciaries of the 401(kthrough (w) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Endeavor Acquisition Corp.)
Conduct of Business by the Company and Parent. (a) From During the period from and after the date hereof and prior of this Agreement to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be required or expressly permitted or contemplated by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Schedule, the Company willagrees with Parent that the Company shall, and will shall cause each of its Subsidiaries to to, (A) conduct carry on its business in all material respects in the ordinary course consistent with past practice, practice and (B) use commercially reasonable efforts to maintain and (I) preserve intact its business organization organization, (II) preserve its assets, rights and advantageous business relationships properties in good repair and to retain condition, (III) keep available the services of its key officers current officers, employees and key employees, consultants and (CIV) take preserve its goodwill and its relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with it; provided, however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovisions.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof of this Agreement and the Effective TimeTime or the Termination Date, without the prior written consent of Parent (which consent shall not be unreasonably withheld delayed or conditioned, except with respect to clauses (i), (ii), (v), (vi), (viii) and (xviii), with respect to which consent may be withheld at the sole discretion of Parent), the Company, unless otherwise required by applicable Law or as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjustshall not, split, combine or reclassify and shall not permit any capital stock or otherwise amend the terms of its capital stock;
(ii) makeSubsidiaries to, declare authorize, declare, set aside, make or pay any dividend, dividends on or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of distributions with respect to its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise whether in cash, assets, stock or other securities of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans or its Subsidiaries), except dividends and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares distributions by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiaryits parent;
(vii) purchaseshall not, selland shall not permit any of its Subsidiaries to, transfersplit, mortgagecombine, encumber subdivide, reclassify or otherwise dispose amend any of its capital stock or other equity securities or issue or authorize or propose the issuance of any properties or assets having a value other securities in excess respect of, in lieu of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course substitution for shares of business consistent with past practiceits capital stock or other equity securities;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(viiiii) except as specifically contemplated required by written agreements or Company Benefit Plans in existence on the date hereof and disclosed under Section 5.1(b3.10(a) of the Company Disclosure Schedule, make or as otherwise required by applicable Law (including as may be required to avoid an income inclusion pursuant to Section 409A(a)(1)(A) of the Code), shall not, and shall not permit any investment in excess of $5,000,000 in its Subsidiaries to (A) increase the aggregatecompensation or other benefits payable or provided to the Company’s present or former directors or officers, whether (B) approve or enter into any employment, change of control, severance or retention agreement with any employee of the Company (except (1) to the extent necessary to attract a new employee to replace an agreement with a departing employee (other than an officer) on terms that are not inconsistent with the Company’s past practice or (2) for employment agreements terminable on less than thirty (30) days’ notice without any penalty, severance, obligation, payment that is contingent upon or related to the consummation of the transaction contemplated by purchase of stock or securities of, contributions to capital tothis Agreement, or purchase other term that is not consistent with the Company’s past practice), (C) establish, adopt, enter into, amend, terminate or waive any rights with respect to any (x) collective bargaining agreement or (y) any plan, trust, fund, policy or arrangement for the benefit of any property current or assets former directors or officers or any of their beneficiaries, (D) except as expressly contemplated by Sections 2.3 and 2.4 of this Agreement, take any action to accelerate the vesting or payment of any compensation or benefit under any Company Benefit Plan or other PersonContract, or (E) adopt any new employee benefit plan or arrangement or amend, modify or terminate any existing Company Benefit Plan;
(viiiiv) make shall not, and shall not permit any acquisition of another Person its Subsidiaries to, change any financial accounting policies or businessprocedures or any of its methods of reporting income, whether deductions or other material items for financial accounting purposes, except as required by purchase GAAP;
(v) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or bylaws or similar applicable organizational documents;
(vi) shall not, and shall not permit any of its Subsidiaries to, issue, deliver, sell, grant, pledge, dispose of or encumber or subject to any Lien, or authorize the issuance, delivery, sale, grant, pledge, disposition or encumbrance of, any Lien upon, any shares of its capital stock or other ownership interest in the Company or any 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 or contributions take any action to capital in excess cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of $5,000,000 in this Agreement or the aggregate, other than acquisitions pursuant to Contracts in effect as express terms of any unexercisable options outstanding on the date of this Agreement), other than (A) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options or the vesting of any Restricted Stock Units, in each case outstanding on the date of this Agreement and (B) the sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes;
(ixvii) shall not hire any new employee or independent contractor or terminate any existing employee or independent contractor, except in the ordinary course of business consistent with past practicebusiness;
(viii) shall not, enter intoand shall not permit any of its Subsidiaries to, renewdirectly or indirectly, extendpurchase, amend redeem or terminate otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(ix) other than pursuant to the Company’s existing revolving credit facility, shall not, and shall not permit any of its Subsidiaries to (A) incur, create, assume or otherwise become liable for, or repay or prepay, any Company Material Contract Indebtedness, or Contract which if entered into prior to amend, modify or refinance the date hereof would be a Company Material Contract terms of any Indebtedness or (B) make any Contracts not in the ordinary courseloans, involving the commitment advances or transfer of value in excess of $1,000,000 in the aggregate in capital contributions to, or investments in, any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereofother person, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of other than the Company or any of its Subsidiaries, ;
(x) except for increases in base salary transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall cause its Subsidiaries not to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets, license or otherwise) any of its or its Subsidiaries’ properties or assets, including the capital stock of any Subsidiary, other than (A) sales of inventory in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits pursuant to any employees, directors, consultants or independent contractors existing agreements in effect prior to the execution of this Agreement that are set forth in Section 3.20(a) of the Company Disclosure Schedule or (C) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated by this Agreement;
(xi) shall not, and shall not permit any of its SubsidiariesSubsidiaries to, except with respect to officersmodify, directors and consultants in the ordinary course of business consistent with past practiceamend, (C) accelerate the vesting ofterminate or waive any rights under any Company Material Contract, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement Contract that would be a Company Benefit Plan Material Contract if in effect on the date hereof or (F) enter intoof this Agreement, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) respect other than in the ordinary course of business consistent with past practice;
(xii) shall not, and shall not permit any of its Subsidiaries to, enter into any newCompany Material Contracts other than in the ordinary course of business consistent with past practice;
(xiii) shall not, and shall not permit any of its Subsidiaries to, acquire (whether by merger, consolidation or acquisition of stock or assets, license or otherwise) (A) any corporation, partnership or other business organization or division thereof or (B) any assets other than purchases of inventory and other assets in the ordinary course of business not having a value in excess of $1,000,000 individually or $5,000,000 in the aggregate;
(xiv) shall not, and shall not permit any of its Subsidiaries to, open or close, or materially amend commit to open or otherwise materially alter close, any currentstore locations or enter into any partnership or joint venture, agreement or obligations authorize or make any other capital expenditures;
(xv) shall not, and shall not permit any of its Subsidiaries to, enter into, amend, waive or terminate (other than terminations in accordance with their terms) any Affiliate Transaction, other than continuing any Affiliate Transactions in existence on the date of this Agreement;
(xvi) shall not, and shall not permit any of its Subsidiaries to, make any material amendment to any Tax Return or make or change any material Tax election;
(xvii) shall not, and shall not permit any of its Subsidiaries to, enter into any new line of business outside of their existing businesses;
(xviii) shall not, and shall not permit any of its Subsidiaries to, adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company; or, or any of its Subsidiaries (other than the Merger);
(xix) agree shall not, and shall not permit any of its Subsidiaries to, write up, write down or write off the book value of any assets that are, individually or in the aggregate, material to take the Company and its Subsidiaries, taken as a whole, other than as may be required by GAAP;
(xx) shall not, and shall not permit any of its Subsidiaries to, pay, discharge, waive, settle or make satisfy any commitment claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than (A) in the ordinary course of business or (B) any claim, liability or obligation not in excess of $100,000 individually or $250,000 in the aggregate; provided, however, that in no event shall the Company or its Subsidiaries settle any claim if such settlement imposes an injunction or any other non-monetary penalty thereon; and
(xxi) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, or announce an intention, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of itself and its Subsidiaries and affiliates, that, between the date of this Section 5.1 Agreement and the definition earlier of Company the Effective Time and the Termination Date, Parent shall not, and shall not permit any of its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after During the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each of the Company, the Stockholder, Parent and the Merger Sub shall, except to the Effective Time or extent that the dateother party shall otherwise consent in writing, if any, carry on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (except where noncompliance would not have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its best efforts consistent with past practices and policies to (i) preserve substantially intact its present business organization, (Bii) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement, without the prior written consent of the other party, during the period from the date of this Agreement and adversely affect continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company, the Stockholder, Parent and the Merger Sub shall not do any of the Parties to obtain following:
(a) Waive any necessary approvals stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any regulatory agency employee, consultant, director or other Governmental Entity required stock plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting the generality of the foregoingGrant any severance or termination pay to any officer or employee except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the Effective Timeother party, except or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(ic) as set forth in Section 5.1(b) Transfer or license to any person or otherwise extend, amend or modify any material rights to any Intellectual Property of the Company Disclosure Scheduleor Parent, (ii) as Parent may consent in writing (which consentapplicable, with respect or enter into grants to transfer or license to any matter referred to person future patent rights, other than in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (the ordinary course of business consistent with respect to past practices provided that in no event shall the Company or Parent license on an exclusive basis or sell any Intellectual Property of the foregoing enumerated items) belowCompany, shall not be unreasonably withheld, conditioned or delayed) or (iii) Parent as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:applicable;
(id) adjustDeclare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock;
(iie) makePurchase, declare redeem or pay any dividendotherwise acquire, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of its capital stock of the Company and Parent, as applicable, including repurchases of unvested shares at cost in connection with the termination of the relationship with any employee or consultant pursuant to agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock or any securities convertible into or exchangeable for shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible or exchangeable securities;
(ivg) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned SubsidiaryAmend its Charter Documents;
(vh) purchaseAcquire or agree to acquire by merging or consolidating with, sellor by purchasing any equity interest in or a portion of the assets of, transferor by any other manner, mortgageany business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of Parent or the Company as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict such party’s ability to compete or to offer or sell any products or services;
(i) Sell, lease, license, encumber or otherwise dispose of any properties or assets having a value in excess assets, except (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except inventory in the ordinary course of business consistent with past practice, and (B) the sale, lease or disposition (other than through licensing) of property or assets that are not material, individually or in the aggregate, to the business of such party;
(j) Except for borrowing under the Company’s existing credit facilities in the ordinary course of business or any new borrowing arrangements entered into by the Company for the purpose of operating the business in the ordinary course or replacing currently existing mezzanine borrowing in the approximate amount of $15 million with C3 Capital Partners and syndicated lenders, incur any indebtedness for borrowed money in excess of $25,000 in the aggregate or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Parent or the Company, as applicable, enter intointo any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, renewnor shall the Company modify or terminate any of its existing credit facilities;
(k) Adopt or amend any employee benefit plan, extendpolicy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable “at will”), pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants, except in the ordinary course of business consistent with past practices;
(l) Pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practices or in accordance with their terms, or liabilities recognized or disclosed in the Stub Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred since the date of such financial statements, or waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is a party or of which Parent is a beneficiary, as applicable;
(m) Except in the ordinary course of business consistent with past practices, modify, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to Parent Contract, as applicable, or waive, delay the date hereof would be a Company Material Contract exercise of, release or assign any material rights or claims thereunder;
(Bn) Except as required by U.S. GAAP, revalue any Contracts not of its assets or make any change in accounting methods, principles or practices;
(o) Except in the ordinary coursecourse of business consistent with past practices, involving the incur or enter into any agreement, contract or commitment or transfer of value requiring such party to pay in excess of $1,000,000 in the aggregate 100,000 in any year12 month period;
(xp) Engage in any action that could reasonably be expected to cause the Merger to fail to qualify as a “reorganization” under Section 368(a) of the Code;
(q) Settle any litigation to which an Insider is a party or where the consideration given by the Company is other than monetary;
(r) Make or rescind any Tax elections that, individually or in the aggregate, could be reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any material income tax liability or, except to the extent as required by Law applicable law, materially change any method of accounting for Tax purposes or prepare or file any Company Benefit Return in a manner inconsistent with past practice;
(s) Form, establish or acquire any subsidiary except as contemplated by this Agreement;
(t) Permit any Person to exercise any of its discretionary rights under any Plan in effect as of to provide for the date hereof, (A) increase in any manner the compensation or benefits automatic acceleration of any employeesoutstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans;
(u) Make capital expenditures except in accordance with prudent business and operational practices consistent with prior practice;
(v) Make or omit to take any action which would be reasonably anticipated to have a Material Adverse Effect;
(w) Enter into any transaction with or distribute or advance any assets or property to any of its officers, directors, consultants partners, stockholders or independent contractors other affiliates other than the payment of the Company or any of its Subsidiaries, except for increases in base salary and benefits in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xixx) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1 (a) will preclude the fiduciaries of the 401(kthrough (w) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Endeavor Acquisition Corp.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the "TERMINATION DATE"), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be contemplated or required by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Schedule, the Company will, covenants and will cause each of its Subsidiaries to agrees with Parent that (A) conduct the business of the Company and its business in all material respects in Subsidiaries shall be conducted in, and such entities shall not take any action except in, the ordinary course consistent with past practiceof business, and (B) the Company and its Subsidiaries shall use commercially reasonable efforts to maintain and preserve intact its their present business organization and advantageous business relationships organizations and to retain the services of its key officers preserve their relationships with significant customers, suppliers, licensors, licensees and key employees, and (C) take no action others with which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsthey have business dealings.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except (A) dividends and distributions paid or made by its directly or indirectly wholly owned Subsidiaries in the ordinary course of business and (B) that the Company may continue to pay regular quarterly cash dividends on the Company Common Stock consistent with past practice (not to exceed $0.37 per share per quarter);
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) except as required by (x) existing written agreements or Company Benefit Plans, or (y) as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to the Company's directors, executive officers, publishers, or any other individual who has entered into an agreement with the Company that provides change in control and/or severance protection by more than 5% from the level at which such compensation or another wholly owned Subsidiarybenefits were payable immediately prior to the date of this Agreement, (B) increase the compensation or benefits payable to any employee of the Company except as in accordance with the ordinary course of business and consistent with past practice, (C) enter into any employment, consulting, special retirement, change of control, separation, severance or retention agreement with any employee of the Company (provided that the Company may enter into individual agreements in accordance with the ordinary course of business and consistent with past practice that provide for payments not in excess of $250,000 per individual and provided further that the total aggregate payments under all such agreements shall not exceed $2,500,000), (D) except as permitted pursuant to clause (B) above, establish, adopt, enter into or amend any Company Benefit Plan, 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, except, in each case, as would not result in a material increase in cost to the Company, or (E) hire, promote, demote or otherwise change the employment status (E.G., part-time, full-time, leave), title or other material term or material condition of employment of any individual who is (or would become after such hiring, promotion, demotion or change) a publisher or executive editor; PROVIDED, HOWEVER, that notwithstanding the foregoing, Parent and the Company agree to cooperate in good faith to jointly design and the Company shall establish a program for the payment of "stay bonuses" to be established in accordance with the provisions outlined in Section 5.1(b)(iii) of the Company Disclosure Schedule;
(iv) shall not, and shall not permit any of its Subsidiaries to, (x) agree to labor or employment arbitration awards or settlements resulting in total payments of more than $300,000 or (y) agree in a labor arbitration or settlement to a work condition that would set a precedent adversely affecting the business of the Company;
(v) purchaseshall not, selland shall not permit any of its Subsidiaries to, transferengage in bargaining with any union representing any employees of the Company or its Subsidiaries, mortgageexcept bargaining that is done after notice to and consultation with Parent;
(vi) shall not, encumber and shall not permit any of its Subsidiaries to, enter into or otherwise dispose of make any properties loans or assets having a value in excess of $1,000,000 in the aggregate advances to any Person of its officers, directors, employees, agents or consultants (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions loans or dispositions pursuant to Contracts in effect as of the date of this Agreement or advances in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to make any indebtedness change in its existing borrowing or lending arrangements for borrowed money or offer, place or arrange any issue on behalf of debt securities, other than any of such persons, except as required by the foregoing that is pursuant to working capital borrowings or letter terms of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingany Company Benefit Plan;
(vii) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedulerequired by GAAP, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock SEC rule or securities of, contributions to capital to, policy or purchase of any property or assets of any other Personapplicable Law;
(viii) make shall not, and shall not permit any acquisition of another Person its Subsidiaries to, adopt any material amendments to its articles of incorporation or business, whether by purchase of stock by-laws or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreementsimilar applicable charter documents;
(ix) except in for transactions among the ordinary course Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries, shall not, and shall not permit any of business consistent with past practice, enter into, renew, extend, amend or terminate its Subsidiaries to,
(A) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any Company Material Contract shares of its capital stock or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not other ownership interest in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company Subsidiaries or any of its Subsidiariessecurities convertible into or exchangeable for any such shares or ownership interest, except or any rights, warrants or options to acquire or with respect to officersany such shares of capital stock, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, ownership interest or the lapsing of forfeiture restrictions convertible or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;exchangeable securities,
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiiiB) take any action that is intended to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or would reasonably be expected to result in the express terms of any of unexercisable options outstanding on the conditions to the Merger set forth in Article VI not being satisfied;date hereof), or
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise issue any material Tax claimequity-based compensation awards, audit or disputewhether settled in stock, cash, or (D) make or surrender any claim for a material refund of Taxesotherwise, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.than
Appears in 1 contract
Samples: Merger Agreement (Knight Ridder Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to earlier of the Effective Time or and the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be expressly contemplated, required or permitted by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Letter, the Company willshall, and will shall cause each of its Subsidiaries to to, (Ax) conduct its business in all material respects in the ordinary course of business consistent with past practice, practice and (By) use its commercially reasonable efforts to maintain and preserve intact in all material respects its business organization and advantageous business relationships and to retain the services of its key officers and key employeesrelationships; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any such provision of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the TransactionsSection 5.1(b).
(b) Without limiting the generality of the foregoing, between From and after the date hereof and prior to earlier of the Effective TimeTime and the Termination Date, and except (iw) as may be required by applicable Law, (x) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (y) as may be expressly contemplated, required or permitted by this Agreement or (z) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementLetter, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid by wholly owned Subsidiaries of the Company to the Company or to any of its other wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another that remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(viiiii) except as specifically contemplated in Section 5.1(b) of required by the Company Disclosure Schedule, make any investment Benefit Plans in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of existence on the date hereof, shall not, and shall not permit any of its Subsidiaries to (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for (1) increases in base salary in the ordinary course of business consistent with past practicepractice to employees below the level of enterprise vice president, and (B2) pay any severance or retirement increases in compensation and benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants clinical workers in the ordinary course of business consistent with past practice, increase the compensation or other benefits (Cincluding severance benefits) accelerate payable or provided to the vesting ofCompany’s directors, officers or the lapsing of forfeiture restrictions non-clinical individual independent contractors or conditions with respect to, any equity or equity-based awardsemployees, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (FB) enter intointo any employment, amendchange of control, alterseverance or retention agreement with any employee, adopt, implement officer or otherwise make any commitment to do individual independent contractor of the Company or any of the foregoing;
its Subsidiaries (xi) except for an agreement entered into with a clinical employee in the ordinary course of business consistent with past practice), waive(C) adopt any material new employee benefit plan or arrangement or materially amend, releasemodify or terminate any existing Company Benefit Plan, assign, settle or compromise any claim, action or proceedingin each case, other than waivers(1) as would not materially increase the cost to the Company or its Subsidiaries or (2) offer letters that are entered into in the ordinary course of business consistent with past practice with newly hired employees and that do not provide for any severance benefits, releases(D) take any action to accelerate the vesting or payment, assignmentsor the funding of any payment or benefit under, settlements any Company Benefit Plan, (E) make any equity or compromises equity-based grants to directors, officers, individual independent contractors, employees or any other Person, or (F) hire or terminate the employment of any “officer” (within the meaning of Section 16(a) of the Exchange Act) of the Company, other than a termination for cause or due to permanent disability;
(iv) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its directors, employees, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries to, change financial accounting policies or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP or SEC rule or policy;
(vi) shall not adopt any amendments to the certificate of incorporation or bylaws of the Company or any material amendments to the certificate of incorporation or bylaws (or equivalent organizational documents) of any of the Company’s Subsidiaries, other than an amendment to the Company’s certificate of incorporation and bylaws to declassify the Board of Directors as previously publicly disclosed;
(vii) shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other equity interests in any Subsidiaries of the Company or any securities convertible into, exercisable for or exchangeable for any such shares or equity interests or any rights, warrants or options to acquire any such shares of capital stock, equity interests or convertible or exchangeable securities, or take any action to cause to be vested any otherwise unvested Company Equity Award (except as otherwise provided by the terms of this Agreement or the express terms of any such Company Equity Award), other than (A) issuances of Shares in respect of any exercise of or settlement of Company Equity Awards outstanding on the date hereof, (B) the incurrence of any Permitted Liens, (C) sales of capital stock of Subsidiaries to third parties permitted by Section 5.1(b)(x)(i) or (D) transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries;
(viii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of Shares from a holder of a Company Equity Award outstanding on the date hereof in satisfaction of withholding obligations or in payment of the exercise price;
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, modify on terms that involve are adverse in any material respect to the Company and its Subsidiaries, taken as a whole, or guarantee, any indebtedness for borrowed money, except for (A) any indebtedness among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) guarantees or credit support provided by the Company or any of its Subsidiaries for indebtedness of the Company or any of its Subsidiaries, to the extent such indebtedness is (I) in existence on the date of this Agreement or (II) incurred in compliance with this Section 5.1(b)(ix), (C) indebtedness incurred pursuant to agreements in effect prior to the execution of this Agreement and set forth on Section 5.1(b)(ix) of the Company Disclosure Letter and (D) indebtedness not to exceed $50 million in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with clauses (A) through (C);
(x) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, (i) sell, lease, license (other than non-exclusive licenses in the ordinary course of business consistent with past practice), transfer, exchange or swap, abandon, allow to lapse or expire (other than in the ordinary course of business consistent with past practice) or subject to any Lien (other than Permitted Liens) or otherwise dispose of any portion of its properties, rights or assets, including the capital stock of Subsidiaries, having an aggregate fair market value in excess of $50 million, (ii) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) or make any investment in any corporation, partnership or other business organization or division thereof having an aggregate fair market value in excess of $100 million (provided that, with respect to any fiscal quarter of the Company, the aggregate fair market value of such acquisitions and/or investments made in such quarter pursuant to this clause (ii) (including the potential acquisitions and/or investments set forth on Section 5.1(b)(x)(ii) of the Company Disclosure Letter and, in the case of the quarter ending June 30, 2018, amounts spent in respect of such acquisitions and/or investments prior to the date hereof in such quarter) shall not exceed the amount budgeted for such quarter in the related budget made available to Parent; provided, further, that the amount budgeted for any particular quarter will be deemed to be increased by an amount equal to the amount budgeted for all prior quarters (following the quarter ended March 31, 2018) that has not been expended) or (iii) make or authorize any new capital expenditures not reflected in the capital expenditures budget made available to Parent (other than acquisitions or investments permitted under clause (ii) of this Section 5.1(b)(x)) having an aggregate value in excess of $20 million, in each case, except pursuant to existing agreements in effect prior to the execution of this Agreement and set forth on Section 5.1(b)(x) of the Company Disclosure Letter;
(xi) shall not, and shall not permit any of its Subsidiaries to, (A) modify, amend, terminate or waive any rights under any Company Material Contract in any material respect, other than in the ordinary course of business consistent with past practice on terms that are not adverse in any material respect to the Company and its Subsidiaries, taken as a whole, (B) enter into any Contract that, if existing on the date hereof, would be a Company Material Contract, other than Company Material Contracts of the type referred to in (I) Section 3.18(a)(vi) or (II) Section 3.18(a) in respect of transactions or actions otherwise permitted by the other provisions of this Section 5.1(b), or (C) modify any privacy policy in any manner that is adverse in any material respect to the Company;
(xii) shall not, and shall not permit any of its Subsidiaries to, settle, pay, discharge or satisfy any Action, other than any Action that involves only the payment of monetary damages not in excess of $1,000,000 3 million individually or any obligation $10 million in the aggregate over the amount reflected or liability reserved against in the balance sheet (or the notes thereto) of the Company SEC Documents relating to Actions; provided, that with respect to Actions relating to medical malpractice and related legal theories such as negligent hiring, supervision and credentialing, the Company and its Subsidiaries may settle, pay, discharge, waive or satisfy such Actions in an amount not in excess of such amount;
$15 million in the aggregate over captive or third-party insurance policy limits (xii) amend or waive any provision of which amounts shall not count against the Charter Documents$3 million and $10 million caps in this Section 5.1(b)(xii));
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) its Subsidiaries to, adopt or enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company or any of its Subsidiaries or enter into a new line of business;
(xvixiv) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, shall not make (other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material in connection with the filing of Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than Returns in the ordinary course of business consistent with past practice), change or revoke any material Tax election, adopt (other than in connection with the filing of Tax Returns in the ordinary course of business consistent with past practice) or change any accounting method with respect to material Taxes or adopt or change any accounting period with respect to material Taxes, file any amended material Tax Return, enter into any newclosing agreement relating to a material amount of Taxes, settle or compromise any material Tax liability (other than with respect to settlements or compromises of any Tax liability for an amount that does not materially exceed the amount disclosed, reflected or reserved in accordance with GAAP in the consolidated financial statements included in the Company SEC Documents with respect to the relevant Tax matter at issue as determined after good faith consultation with Parent), or materially surrender any right to claim a material refund of Taxes (it being agreed and understood that, notwithstanding any other provision in this Agreement, none of clauses (i) through (xiii) nor (xv) through (xvii) shall apply to Tax matters);
(xv) shall not, and shall not permit any of its Subsidiaries, to recognize any union or other labor organization as the representative of any of the employees of the Company or any of the Subsidiaries, or enter into any new or amended collective bargaining agreement with any labor organization, in each case, except as required by applicable Law;
(xvi) shall not, and shall not permit any of its Subsidiaries to, (i) enter into or amend in any manner any Contract with any Person covered under Item 404 of Regulation S-K under the Securities Act or (ii) make any payment to any Person covered under Item 404 of Regulation S-K under the Securities Act (other than any payments, transactions or benefits pursuant to Contracts or Company Benefit Plans made available to Parent prior to the date hereof, or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; oras permitted by Section 5.1(b)(iii));
(xixxvii) agree shall not adopt a rights plan, “poison pill” or similar agreement that is, or at the Effective Time will be, applicable to take this Agreement, the Merger or make the other transactions contemplated hereby; and
(xviii) shall not, and shall not permit any commitment of its Subsidiaries to, authorize or agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition earlier of Company the Effective Time and the Termination Date, Parent and Merger Sub shall not take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations or entering into any new lines of business) that would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the "TERMINATION DATE"), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, (iii) as may be expressly permitted pursuant to this Agreement or (iv) as set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by the Company covenants and agrees with Parent with respect to clauses (A) that the business of the Company and (B) below (which consent its Subsidiaries shall be conducted only in, and such entities shall not be unreasonably withheld, conditioned or delayed)take any action except in, the Company will, and will cause each ordinary course of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course and consistent with past practice, (B) ; and the Company for itself and on behalf of its Subsidiaries agrees with Parent to use commercially its reasonable best efforts to maintain preserve substantially intact their business organizations and preserve intact its business organization and advantageous business relationships and goodwill, to retain keep available the services of its key officers those of their present officers, employees and key employeesconsultants who are integral to the operation of their businesses as presently conducted and to preserve their present relationships with significant customers, licensees, licensors and (C) take suppliers and with other persons with whom they have significant business relations; PROVIDED, HOWEVER, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 5.1 shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoingprovision. The Company agrees with Parent, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may without the prior written consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not toParent:
(i) adjustshall not, split, combine or reclassify and shall not permit any capital stock or otherwise amend the terms of its capital stock;
(ii) Subsidiaries that is not wholly-owned to, declare, set aside, make, declare authorize or pay any dividend, dividends on or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of with respect to its outstanding share capital stock or any securities or obligations convertible (whether currently convertible in cash, assets, shares or convertible only after the passage other securities of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any its Subsidiaries), other direct or indirect wholly owned Subsidiary, than dividends in nonmaterial amounts paid as part of the Company's cash management system in the ordinary course of business and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant past practice by any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly wholly-owned Subsidiary of the Company to the Company or another wholly owned Subsidiaryany wholly-owed Subsidiary of the Company;
(vii) purchaseshall not, selland shall not permit any of its Subsidiaries to, transferadjust, mortgagesubdivide, encumber split, combine or otherwise dispose reclassify any of its share capital or issue or authorize or propose the issuance of any properties other securities in respect of, in lieu of or assets having a value in excess of $1,000,000 in the aggregate to any Person substitution for, shares;
(other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions iii) except as required pursuant to Contracts existing written agreements or employee benefit plans (including the severance and retention plans) in effect as of the date hereof, as specifically permitted by the terms of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incuras otherwise required by Law, assumeshall not, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than and shall not permit any of its Subsidiaries to (A) increase the foregoing that is pursuant compensation or other benefits payable or to working capital borrowings become payable to its directors, executive officers or letter other employees of credit issuances under existing credit facilitiesthe Company, in each case, except in the ordinary course of business consistent with past practice (including, for this purpose, the normal salary, bonus and equity compensation review process conducted each year), (B) grant any severance or termination pay to, or enter into any severance agreement with any director, executive officer or other employee of the Company or any of its Subsidiaries at a level of "Director" (i.e., the level immediately below "Vice President") or above, (C) enter into or amend any individual employment arrangement with any executive officer or other employee of the Company (except (i) with respect to promotions of current employees to a level below "Senior Vice President" and with a base salary of less than $150,000 per year or an equivalent foreign amount, or (ii) to the extent necessary to replace a departing employee; provided that any such replacement employee (whether internal or external) is at a level below "Senior Vice President" and has a base salary of less than $150,000 per year or an equivalent foreign amount, (D) accelerate the payment or vesting of benefits or amounts payable or to become payable under any Company Benefit Plan or Foreign Benefit Plan, (E) establish, adopt, enter into or amend any bonus plan or arrangement covering employees of the Company or (F) establish, adopt, enter into or 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, except, in each case, as would not reasonably be expected result in a material increase to delaythe Company in the cost of maintaining such collective bargaining agreement, adversely affect plan, trust, fund, policy or impede Parent’s ability to obtain the Financingarrangement;
(viiiv) except as specifically contemplated in Section 5.1(b) shall not, and shall not permit any of the Company Disclosure Scheduleits Subsidiaries to, enter into or make any investment in excess loans to any of $5,000,000 in the aggregateits officers, whether by purchase of stock directors, employees, agents or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
consultants (viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except loans or advances in the ordinary course of business consistent with past practice, enter intoincluding travel cash advances, renewto employees of the Company (other than officers and directors with respect to any loans or advances other than travel cash advances) not to exceed U.S.$100,000 in each case) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons, extend, amend or terminate (A) except as required by the terms of any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any yearBenefit Plan;
(xv) except to the extent required by Law shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company procedures or any of its Subsidiariesmethods of reporting income, deductions or other material items for financial accounting purposes, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP GAAP, SEC rule or policy or applicable Law;
(xviivi) (A) makeexcept in respect of the Merger, change shall not, and shall not permit any of its Subsidiaries to, authorize, propose or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle announce an intention to authorize or compromise any material Tax claim, audit or disputepropose, or (D) make enter into any agreement with respect to, any merger, consolidation or surrender any claim for business combination, the acquisition or sale of assets, which are material to the Company and its Subsidiaries, taken as a material refund of Taxeswhole, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(vii) except as required in connection with the transactions contemplated by Section 5.4(d), shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its memorandum and articles of association or similar applicable charter or governing documents;
(viii) shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any of its shares or other ownership interest or voting security in the Company or any 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, voting securities or ownership interests or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of Company Ordinary Shares in respect of any exercise of Company Stock Options and Company Stock-Based Awards outstanding on the date hereof, (B) the sale of Company Ordinary Shares pursuant to the exercise of options to purchase Company Ordinary Shares if necessary at the direction of the applicable optionee with respect to the shares underlying such optionee's options upon exercise or for withholding, or (C) issuances of Company Ordinary Shares or options to acquire Company Ordinary Shares pursuant to obligations under employment agreements in effect on the date hereof (which grants are required to be made on a date prior to Closing);
(ix) except as may be required under employment agreements executed prior to the date hereof (which grants are required to be made on a date prior to Closing), shall not, and shall not permit any of its Subsidiaries to, grant, confer or award any compensatory warrants, options, convertible security or other rights to acquire any of its shares or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the express terms of any unexercisable options outstanding on the date hereof);
(x) except in connection with the exercise of outstanding stock options, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any of its shares or any rights, warrants or options to acquire any such shares;
(xi) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay, refinance or otherwise become liable for any Indebtedness (directly, contingently or otherwise), except for the incurrence of Indebtedness in the ordinary course of business of the Company or any of its Subsidiaries under existing credit facilities (including the Company's existing cash-collateralized letter of credit facility as it may be extended or renewed) of the Company or any of its Subsidiaries (or under a cash-collateralized letter of credit facility that is substituted for or replaces or refinances the Company's existing cash-collateralized letter of credit facility on substantially similar terms (including a lender commitment thereunder in an amount not to exceed $150 million) and which will provide for the immediate release of the cash collateral upon repayment of amounts outstanding at Closing and termination of such agreement) in an amount not to exceed U.S.$290 million in aggregate principal amount outstanding at any time;
(xii) shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its properties or assets, including the capital stock of Subsidiaries, other than in the ordinary course of business consistent with past practice and except (A) pursuant to existing agreements in effect prior to the execution of this Agreement or (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby;
(xiii) shall not, and shall not permit any of its Subsidiaries to, enter into, any Company Material Contracts with a term longer than one year which cannot be terminated without material penalty upon notice of sixty (60) days or less;
(xiv) notwithstanding clause (xiii) above and without limiting any other restrictions hereunder, shall not, and shall not permit any of its Subsidiaries to, enter into or modify (A) any Contract described under clause (v), clause (x), and clause (xvi), in each case of Section 3.16(a) or (B) any leases covering Leased Real Property for retail stores in the United States or Canada that are not outlet stores;
(xv) shall not, and shall not permit any of its Subsidiaries to, dispose of, license, grant, or obtain, or permit to lapse any rights to, any material Intellectual Property, or renew any existing license agreement of the Company and its Subsidiaries on materially different terms relative to existing terms;
(xvi) shall not, and shall not permit any of its Subsidiaries to, make any loans, advances or capital contributions to, or investments in, any other person;
(xvii) shall not, and shall not permit any of its Subsidiaries to, enter into any newtransaction, agreement, understanding or materially amend arrangement between (i) the Company or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company's Subsidiaries, on the one hand, and (ii) any affiliate of the Company (other than the Company's Subsidiaries), on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K;
(xviii) shall not, and shall not permit any of its Subsidiaries to, settle any actions, suits, inquiries, investigations, or proceedings pending or threatened against or affecting the Company or any of the Company's Subsidiaries or any of their respective properties at law or in equity before any Governmental Entity (it being understood that the Company shall consult with Parent in the defense and/or settlement of any such actions, suits, inquiries, investigations, or proceedings), other than in the ordinary course of business consistent with past practice, but not, in any individual case, in excess of U.S.$1,000,000 or that involves equitable remedies (including but not limited to any that would prohibit or restrict the Company from operating as it is currently or has historically); PROVIDED, that the Company and its Subsidiaries shall be permitted to settle in its discretion for monetary amounts only (other than non-monetary matters that do not materially restrict the future operations of the business) any of the matters set forth on Annex C of Section 5.1 of the Company Disclosure Schedule in a monetary amount up to the amount set forth opposite such matter on such schedule;
(xix) shall not, and shall not permit any of its Subsidiaries to, enter into or materially modify any currency exchange, commodities or other hedging transactions or arrangements, other than in the ordinary course of business and consistent with past practice;
(xx) shall not, and shall not permit any of its Subsidiaries to, make any capital expenditures, capital additions or capital improvements in excess of U.S.$100 million in the aggregate amount authorized in the capital expenditures budget set forth on Annex A of Section 5.1 of the Company Disclosure Schedule, provided further that any capital expenditures, capital additions or capital improvements (whether new or maintenance and whether pursuant to one or more outlays) in excess of $1 million per project shall require the consent of Parent; or
(xixxxi) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be consented to in writing by Parent (it being agreed that Parent shall respond to any request for consent as promptly as reasonably practicable); (iii) as may be expressly contemplated, expressly required or expressly permitted by this Agreement or (iv) as set forth in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)Letter, the Company willcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in the ordinary course of business in all material respects and the Company shall, and will shall cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practiceto, (B) use commercially reasonable efforts to maintain and preserve intact in all material respects its business organization and advantageous business relationships maintain existing relations and to retain the services of its key goodwill with Governmental Authorities, customers, suppliers, creditors, lessors, officers and key employees, and (C. The Company shall take the actions set forth on Section 5.1(a)(ii) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the TransactionsCompany Disclosure Schedules.
(b) Without limiting Subject to the generality exceptions contained in clauses (i) through (iv) of Section 5.1(a), the foregoingCompany agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except without the prior written consent of Parent (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as it being agreed that Parent may consent in writing (which consent, with respect shall respond to any matter referred to in items (vrequest for consent as promptly as reasonably practicable), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid by Subsidiaries of the Company to the Company or to any of its wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) except as required by existing written agreements, Company Benefit Plans (including the 2012 Annual Performance Incentive Program a summary of the material terms of which is set forth on Section 5.5(d) of the Company Disclosure Letter) or Company Foreign Plans (and then only in accordance with the terms of such written agreements, Company Benefit Plans or Company Foreign Plans as of the date hereof), or as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to the Company’s directors or executive officers, (B) except in the ordinary course of business, increase the compensation or other benefits payable or provided to the Company’s employees that are not directors or executive officers, (C) enter into any employment, change of control, severance or retention agreement with any employee of the Company or another wholly owned Subsidiary;
any of its Subsidiaries (vexcept (1) purchase, sell, transfer, mortgage, encumber or otherwise dispose for severance agreements entered into with employees in the ordinary course of any properties or assets having a value business in excess connection with terminations of employment that provide for payments less than $1,000,000 in the aggregate or (2) for employment agreements terminable on no more than 60 days’ notice without penalty), (D) establish, adopt, enter into or amend any Company Benefit Plan or plan, agreement or arrangement that would have been a Company Benefit Plan had it been in effect on the date hereof and except as otherwise permitted pursuant to clauses (A) through (C) of this Section 5.1(b)(iii), (E) terminate the employment of any Person (other than to a wholly owned Subsidiary)employee identified on Section 5.1(b)(iii(E) of the Company Disclosure Letter, other than encumbrancesfor cause, acquisitions or dispositions pursuant (F) with respect to Contracts any employee identified on Section 5.1(b)(iii(F) of the Company Disclosure Letter, (1) terminate the employment of any such employee, other than for “Cause” or (2) take any action that results in such employee terminating employment with the Company for “Good Reason,” as “Cause” and “Good Reason” are defined in such employee’s employment agreement with the Company as in effect as of on the date of this Agreement Agreement;
(iv) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its executive officers, directors, employees, agents or consultants (other than loans or advances in the ordinary course of business consistent with past practice) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries to, change financial accounting policies or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vi) shall not, and shall not permit any of its Subsidiaries to, amend any provision of its certificate of incorporation or bylaws or similar applicable charter or organizational documents;
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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, take any action to cause to be exercisable any otherwise unexercisable Company Option (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options or awards outstanding on the date hereof) or otherwise make any changes (by combination, merger, consolidation, reorganization, liquidation, split, combination, reclassification, adjustment or otherwise) in the capital structure of the Company or any of its Subsidiaries or amend the terms of any securities of the Company or any of its Subsidiaries, other than issuances of shares of Common Stock in respect of any exercise of Company Options and settlement of any Company RSU Awards outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b);
(viii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of shares of Common Stock from a holder of a Company Option or Company RSU Award in satisfaction of withholding obligations or in payment of the exercise price;
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offerotherwise), place except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or arrange among the Company’s wholly owned Subsidiaries, (B) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 5.1(b)(ix); or (C) indebtedness for borrowed money pursuant to the Existing Credit Facility not to exceed $5,000,000 in aggregate principal amount outstanding at any issue time incurred by the Company or any of debt securities, its Subsidiaries other than any of the foregoing that is pursuant to working capital borrowings in accordance with clauses (A) or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing(B);
(viix) except as specifically contemplated in Section 5.1(b) of for transactions among the Company Disclosure Scheduleand its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, make shall not, and shall not permit any investment of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any portion of its tangible properties or assets, including the capital stock of Subsidiaries, having a value in excess of $5,000,000 1,000,000, individually or in the aggregate, whether except (A) pursuant to existing agreements in effect prior to the execution of this Agreement or (B) as may be required by purchase applicable Law or any Governmental Entity in order to permit or facilitate the consummation of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Personthe transactions contemplated hereby;
(viiixi) make shall not, and shall not permit any acquisition of another Person its Subsidiaries to enter into, materially modify, materially amend, terminate or businessgrant any material waiver under, whether by purchase of stock any Company Material Contract or securities or contributions any contract that would constitute a Company Material Contract if entered into prior to capital in excess of $5,000,000 in the aggregate, date hereof (other than the expiration or renewal of any Company Material Contract in accordance with its terms), except that the Company and any of its Subsidiaries may enter into agreements providing for acquisitions pursuant to Contracts in effect as that would otherwise be permitted under clause (xiii);
(xii) shall not, and shall not permit any of its Subsidiaries to, (A) make, change or revoke any material Tax election or take any material position on a Tax Return filed on or after the date of this Agreement;
Agreement or adopt any material method therein that is inconsistent with material elections made, positions taken or methods used in preparing or filing similar returns in prior periods, (ixB) file any amended Tax Return with respect to any material Tax, (C) make a material change in any method of Tax accounting, (D) settle, compromise, or enter into any closing agreement relating to any material Tax proceeding, (E) except in the ordinary course of business consistent with past practice, enter intogive or request any waiver of a statute of limitation with respect to any material Tax Return or (F) fail to timely file any material Tax Return or pay any material Taxes required to be paid;
(xiii) shall not, renewand shall not permit any of its Subsidiaries to, extendacquire (by merger, amend consolidation, purchase of stock or terminate assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof), other than (A) any Company Material Contract or Contract which if entered into prior to the date hereof transactions that would be a Company Material Contract permissible under clause (xiv) below or (B) any Contracts acquisitions that do not exceed $2,500,000 in the ordinary courseaggregate;
(xiv) shall not, involving the commitment and shall not permit any of its Subsidiaries to, make or transfer of value agree to make any capital expenditure in excess of $1,000,000 in other than as contemplated by the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors capital expenditures budget of the Company or any of its Subsidiaries, except for increases set forth in base salary in the ordinary course of business consistent with past practice, (BSection 5.1(b)(xiv) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective TimeDisclosure Letter;
(xv) shall not, and shall not permit any of its Subsidiaries to, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company or any of its Subsidiaries;
(xvi) implement shall not, and shall not permit any of its Subsidiaries to, settle, pay, discharge or adopt satisfy (A) any material change in its Tax Transaction Litigation or financial accounting principles, practices or methods(B) any other Action, other than as may be required by GAAP than, with respect to this clause (B), in the ordinary course of business that involve only the payment of monetary damages not in excess of $250,000 individually or applicable Law$500,000 in the aggregate;
(xvii) (A) makeenter into, change amend, modify or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or disputeterminate, or (D) make or surrender grant any claim for a material refund of Taxeswaiver under, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) any Related Party Transaction, other than in the ordinary course of business consistent with past practiceon terms, taken as a whole, no less favorable to the Company or its Subsidiary (as applicable) than terms that would be obtained from an unaffiliated third party;
(xviii) shall not, and shall not permit any of its Subsidiaries to, enter into any new, or materially amend or otherwise materially alter new line of business outside the businesses being conducted by the Company and its Subsidiaries on the date hereof and any current, agreement or obligations with any Affiliate of the Companyreasonable extensions thereof; orand
(xix) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition Effective Time, Parent and Merger Sub shall not, and shall not permit any of Company their respective Subsidiaries or Affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would, individually or in the aggregate, have a Parent Material Adverse Effect, Effect or prevent or materially delay the consent consummation of any Officer Shareholder will be deemed the consent of Parenttransactions contemplated by this Agreement.
Appears in 1 contract
Samples: Merger Agreement (Ancestry.com Inc.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the "Termination Date"), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as is expressly required by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Schedule, the Company willagrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in such entities shall not take any action except in, the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsbusiness.
(b) Without limiting the generality of the foregoing, the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof of this Agreement and the Effective Time, except (i) as set forth in Section 5.1(b) earlier of the Company Disclosure ScheduleEffective Time or the Termination Date, (ii) as without the prior written consent of Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries);
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or otherwise amend issue or authorize or propose the terms issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iiiii) make, declare except as required by existing written agreements or pay any dividendCompany Benefit Plans, or make as otherwise required by applicable Law (including Section 409A of the Code), shall not, and shall not permit any of its Subsidiaries to (A) except as may be required by contract, increase the compensation or other distribution onbenefits payable or provided to the Company's directors, officers or employees, other than annual increases of salaries in the ordinary course of business to any non-officer employee, (B) enter into any employment, change of control, severance or retention agreement with any employee of the Company (except (1) to the extent necessary to replace (and on terms consistent with) an agreement with a departing employee who was not one of the ten (10) most highly compensated employees of the Company and its Subsidiaries, taken as a whole, (2) for employment agreements terminable on less than thirty (30) days' notice without penalty, (3) for severance agreements entered into with employees in the ordinary course of business in connection with terminations of employment or (4) as set forth on Section 5.1(b)(iii) of the Company Disclosure Schedule), or directly (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or indirectly redeemamend any collective bargaining agreement, purchase plan, trust, fund, policy or otherwise acquire arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries;
(iv) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) shall not, and shall not permit any of its Subsidiaries to, (A) adopt any amendments to its certificate of incorporation or bylaws or similar applicable charter documents or (B) convene any regular or special meeting (or any adjournment thereof) of the stockholders of the Company other than the Company Meeting;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date of this Agreement), other than (A) for dividends paid by issuances of shares of Company Common Stock in respect of any direct exercise of Company Stock Options and settlement of any Company Stock-Based Awards outstanding on the date of this Agreement or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises sale of shares of Company Common Stock pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock PlansOptions to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes;
(iiivii) grant except for transactions among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries and except in the ordinary course of business consistent with past practice, shall not, and shall not permit any Person any right to of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stockstock or any rights, warrants or options to acquire any such shares;
(ivviii) issue shall not, and shall not permit any shares of capital stock except pursuant to its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), other than (A) borrowings for working capital purposes only (and not to refinance or repay any existing indebtedness) in the exercise ordinary course of Company Stock Optionsbusiness consistent with past practice and in no event to exceed $15,000,000 in aggregate, (B) the vesting of Company RSUs or Company Performance Shares, granted under any indebtedness for borrowed money among the Company Stock Plans and outstanding as of its Subsidiaries or among the date hereof and in accordance with the terms of such instruments as of the date hereofCompany's Subsidiaries, and (C) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money (it being understood that the Company shall not incur any indebtedness under its working capital facilities to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money) and (D) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company’s deferred compensation plans , which indebtedness is incurred in accordance compliance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiarythis Section 5.1(b);
(vix) purchaseexcept for transactions among the Company and its Subsidiaries or among the Company's Subsidiaries, shall not sell, lease, license, transfer, mortgageexchange or swap, encumber mortgage or otherwise encumber, or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets, including the capital stock of Subsidiaries, as well as, the intellectual property and information technology assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary)Company and its Subsidiaries, other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vix) incurshall not, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than and shall not permit any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital its Subsidiaries to, modify, amend, terminate or purchase of waive any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) rights under any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except respect in a manner which is adverse to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary other than in the ordinary course of business consistent with past practicebusiness;
(xi) shall not, (B) pay and shall not permit any severance of its Subsidiaries to, abandon, surrender or retirement benefits fail to properly prosecute or maintain any employees, directors, consultants Intellectual Property of Company or independent contractors of its Subsidiaries in any material respect in a manner which is adverse to the Company or its Subsidiaries;
(xii) shall not, and shall not permit any of its SubsidiariesSubsidiaries to, except with respect to officers, directors and consultants enter into any Company Material Contracts other than customer contracts entered into in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoingbusiness;
(xixiii) except shall not, and shall not permit any of its Subsidiaries to, make any capital expenditures or other expenditures with respect to property, plant or equipment in excess of $3,000,000 per quarter in the ordinary course aggregate for the Company and its Subsidiaries, taken as a whole;
(xiv) shall not, and shall not permit any of its Subsidiaries to, adopt a plan or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company, other than wholly-owned Subsidiaries;
(xv) shall not, and shall not permit any of its Subsidiaries to, fail to amend, renew, replace, or otherwise to keep in full force and effect any material permits, licenses, security clearances, or any other approvals or permissions necessary for the operation of the business consistent with past practiceof the Company and its Subsidiaries as it is currently being conducted;
(xvi) shall not, waiveand shall not permit any of its Subsidiaries to, release, assigncompromise, settle or compromise agree to settle any claimsuit, action action, claim or proceeding, proceeding other than waivers, releases, assignmentscompromises, settlements or compromises agreements that involve only the payment of monetary damages not in excess of $100,000 individually or $1,000,000 in the aggregate, without the imposition of equitable relief on, or the admission of wrongdoing by, the Company or any obligation of its Subsidiaries;
(xvii) shall, and shall cause its Subsidiaries to, keep in force insurance policies or liability replacement or revised provisions providing insurance coverage consistent in all material respects with respect to the assets, operations and activities of the Company and its Subsidiaries as are currently in excess of such amounteffect;
(xiixviii) amend shall not, and shall not permit any of its Subsidiaries to, make (other than in accordance with past practice), change or waive rescind any provision of the Charter Documentselection relating to Taxes;
(xiiixix) shall not, and shall not permit any of its Subsidiaries to, settle or compromise any material claim relating to Taxes;
(xx) shall not, and shall not permit any of its Subsidiaries to, amend any material Tax Return; and
(xxi) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing actions.
(c) Parent agrees with the Company, on behalf of itself and its Subsidiaries and affiliates, that, between the date of this Agreement and the Effective Time, Parent shall not, and shall not permit any of its Subsidiaries to, take or agree to take any action that is intended (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” in, individually or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practiceaggregate, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), the Company will(iii) as may be required, and will cause each of its Subsidiaries to permitted or expressly contemplated by this Agreement or (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (iiv) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, the Company agrees with Parent that (iiA) the business of the Company and its Affiliates shall be conducted in, and such entities shall not take any action except in, the ordinary course of business and the Company shall use commercially reasonable efforts to (1) preserve intact its and its Affiliates’ present business organization and capital structure; (2) maintain in effect all material Company Permits that are required for the Company or its Affiliates to carry on their respective businesses; (3) keep available the services of present officers and key employees; (4) maintain the current relationships with its lenders, suppliers and other persons with which the Company or its Affiliates have significant business relationships; and (5) maintain the Real Property, including all of the Improvements, in substantially the same condition as Parent may consent of the date of this Agreement, ordinary wear and tear excepted, and shall not, except in writing (which consentthe ordinary course of business, demolish or remove any of the existing Improvements or erect new Improvements on the Real Property or any portion thereof; provided, however, that no action by the Company or its Affiliates with respect to matters specifically addressed by any matter referred to in items provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(v)b) The Company agrees with Parent, on behalf of itself and its Affiliates, that between the date of this Agreement and the Effective Time or the Termination Date, without the prior written consent of Parent (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, which consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) makeshall not authorize, declare or pay any dividend, dividends on or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of with respect to its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Optionswhether in cash, (B) the vesting of Company RSUs assets, stock or Company Performance Shares, granted under the Company Stock Plans and outstanding as other securities of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (CCompany) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares a dividend or distribution by a wholly owned Subsidiary of the Company to the Company in the ordinary course of business;
(ii) shall not, and shall not permit any of its Affiliates to, split, combine or another reclassify any of its capital stock or other equity securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity securities, except for any such transaction by a wholly owned SubsidiarySubsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law (including Section 409A of the Code), shall not, and shall not permit any of its Affiliates to (A) except in the ordinary course of business, increase or accelerate the payment of the compensation or other benefits payable or provided to the Company’s present or former directors, officers or employees, (B) approve or enter into, and will use its reasonable best efforts to cause the Managed Practices not to approve or enter into, any employment, change of control, severance or retention agreement with any non-physician employee of the Company or Managed Practice (except (1) for employment agreements terminable on less than thirty (30) days’ notice without penalty or severance obligation or (2) for severance agreements entered into with employees (other than officers) in the ordinary course of business in connection with terminations of employment that do not involve payments in excess of $200,000), (C) approve or enter into, and will use its reasonable best efforts to cause the Managed Practices not to approve or enter into, any employment or retention agreement with any physician employee of the Company or Managed Practice that provides for potential aggregate annual compensation, severance or any change of control payment(s), in any such case, in excess of $750,000, or (D) establish, adopt, enter into, amend, terminate or waive any rights with respect to any (x) collective bargaining agreement, (y) any plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries, except, in the case of clause (y) only, as would not, individually or in the aggregate, cause the accelerated payment of any compensation or benefits or result in a material increase in cost to the Company or (z) any Company Benefit Plan;
(iv) shall not, and shall not permit any of its Affiliates to, change in any material respects any financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) purchaseshall not, and shall not permit any of its Affiliates to, adopt any amendments to its articles of incorporation or bylaws or similar applicable charter documents;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Affiliates to, issue, sell, transferpledge, mortgage, encumber or otherwise dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any properties shares of its capital stock or assets having a value in excess of $1,000,000 other ownership interest in the aggregate Company or any of its Affiliates 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 Person such shares of capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (other than to a wholly owned Subsidiaryexcept as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date of this Agreement), other than encumbrancesissuances of shares of Company Common Stock in respect of any exercise of Company Stock Options in each case outstanding on the date of this Agreement.
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, acquisitions shall not, and shall not permit any of its Affiliates to, directly or dispositions indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(viii) shall not, and shall not permit any of its Affiliates to, incur, assume, guarantee, prepay or otherwise become liable for, modify in any material respect the terms of, any Indebtedness for borrowed money or become responsible for the obligations of any person (directly, contingently or otherwise), except for (A) any intercompany Indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) Indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing Indebtedness for borrowed money set forth on Section 3.25 of the Company Disclosure Schedule without increasing the amount of such permitted borrowings or incurring breakage costs, and provided that, except as set forth on Schedule 5.1(b)(viii), any such Indebtedness is prepayable with out premium or penalty, or with premium or penalty that is no greater than the prepayment premium or penalty applicable to the Indebtedness replaced by such Indebtedness, (C) guarantees by the Company of Indebtedness or borrowed money of the Company, which Indebtedness for borrowed money is incurred in compliance with this Section 5.1(b)(viii), (D) Indebtedness for borrowed money incurred pursuant to Contracts the terms of agreements in effect prior to the execution of this Agreement, including amounts available but not borrowed as of the date of this Agreement, to the extent such agreements are set forth on Section 3.25 of the Company Disclosure Schedule and (E) Indebtedness for borrowed money not to exceed $5,000,000 (excluding existing plans for capital expenditures and working capital requirements of the Company for 2007 and the first quarter of 2008 that have previously been made available to Parent) in aggregate principal amount outstanding at any time incurred by the Company and its Subsidiaries other than in accordance with clauses (A)-(E), inclusive;
(ix) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall cause its Affiliates not to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets, license or otherwise), any material portion of its or its Affiliates’ properties or assets, including the capital stock of Affiliates, other than in the ordinary course of business consistent with past practice with an aggregate value not to exceed $1,000,000 and other than (A) pursuant to existing agreements in effect prior to the execution of this Agreement, (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated by this Agreement or (C) dispositions of obsolete equipment in the ordinary course of business consistent with past practice;
(vix) incurshall not, assumeand shall not permit any of its Affiliates to, guaranteemodify, prepay amend, terminate or become obligated with waive any rights under any Company Material Contract, or any Contract that would be a Company Material Contract if in effect on the date of this Agreement, in any material respect in a manner which is adverse to the Company;
(xi) shall not, and shall not permit any indebtedness for borrowed money or offerof its Affiliates to, place or arrange enter into any issue of debt securities, Company Material Contracts other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financingbusiness;
(viixii) except as specifically contemplated in Section 5.1(b) shall not, and shall not permit any of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital its Affiliates to, enter into, amend, waive or purchase of terminate (other than terminations in accordance with their terms) any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregateAffiliate Transaction, other than acquisitions continuing any Affiliate Transactions pursuant to Contracts the terms and conditions thereof in effect as of existence on the date of this Agreement;
(ixxiii) except in shall not, and shall not permit any of its Affiliates to, without the ordinary course prior written consent of business consistent with past practiceParent, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law Law, adopt or change any Company Benefit Plan in effect as of the date hereofaccounting method or accounting period for Tax purposes, (A) increase make any amendment in any manner the compensation Tax Return, make or benefits of change any employeesTax election, officers, directors, consultants settle or independent contractors compromise any Tax liability of the Company or any of its SubsidiariesAffiliates, except for increases in base salary in agree to an extension of the ordinary course statute of business consistent limitations with past practice, (B) pay any severance respect to the assessment or retirement benefits to any employees, directors, consultants or independent contractors determination of material Taxes of the Company or any of its SubsidiariesAffiliates, except enter into any closing agreement with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, any Tax or the lapsing of forfeiture restrictions or conditions with respect to, surrender any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be right to claim a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfiedTax refund;
(xiv) shall not, and shall not permit any of its Affiliates to, adopt or enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company, or any of its Affiliates (other than the Merger);
(xvixv) implement shall not, and shall not permit any of its Affiliates to, write up, write down or adopt write off the book value of any assets that are, individually or in the aggregate, material change in to the Company and its Tax or financial accounting principlesSubsidiaries, practices or methodstaken as a whole, other than as may be required by GAAP or applicable Law;
(xviixvi) shall not, and shall not permit any of its Affiliates to, pay, discharge, waive, settle or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practicepractice or (B) any claim, liability or obligation not in excess of $250,000 individually or $750,000 in the aggregate, excluding any amounts which may be paid under the Company’s or its Affiliates’ insurance policies;
(xvii) shall not and shall not permit any of its Affiliates to enter into any newnew line of business or discontinue any line of business;
(xviii) shall not and shall not permit any of its Affiliates to settle, pay or materially amend discharge, any litigation, investigation, arbitration, proceeding or otherwise materially alter other claim liability or obligation except in the ordinary course not in excess of $250,000 individually or $750,000 in the aggregate, excluding any current, agreement or obligations with any Affiliate of the Company; oramounts which may be paid under existing insurance policies;
(xix) agree except in the ordinary course of business and consistent with the Company’s historical practices and except as set forth in the Company plans for 2007 and for the first quarter of 2008, shall not and shall not permit any of its Affiliates to take amend, modify, extend, renew or terminate any lease for any Leased Real Property, and shall not enter into any new lease, sublease, license or other agreement for the use or occupancy of any real property; provided, however, that the above exceptions shall not apply to any transaction with any Affiliates of the Company;
(xx) (A) take, or fail to take, any action that could reasonably be expected to result in, any loss, lapse, abandonment, invalidity or unenforceability of any material Company Intellectual Property; or (B) enter into any agreement with any other person that materially limits or restricts the ability of the Company or any of its Affiliates to conduct certain activities or use certain assets (including any Company Intellectual Property);
(xxi) shall not and shall not permit any of its Affiliates to, authorize, or make any commitment with respect thereto, any capital expenditure in excess of $1,000,000 individually or $3,000,000 in the aggregate (including, without limitation, expenditures for acquisitions of assets or entities, joint ventures and the establishment of de novo centers), except for capital expenditures that are contemplated by the Company’s existing plan for capital expenditures for 2007 and the first quarter of 2008 previously made available to Parent;
(xxii) shall not and shall cause its Affiliates not to, fail to maintain in full force and effect material insurance policies covering the Company and its Affiliates and their respective properties, assets and businesses in a form and amount consistent with past practice;
(xxiii) shall not and shall not permit any of its Affiliates to take any action (including rescinding, amending or modifying any bylaw amendment or previous authorization or approval of the actions prohibited Board of Directors, Special Committee or disinterested directors) that would or could reasonably be expected to cause any Anti-Takeover Statute to be or become applicable to the Merger and the other transactions contemplated by this Section 5.1(b)Agreement or to the Support and Voting Agreements and the agreements contemplated by the Support and Voting Agreements; providedor (xxiv) other than transactions between the Company and its Subsidiaries or transactions among the Company’s Subsidiaries, that nothing in this Section 5.1(bshall not and shall not permit any of its Affiliates to make any loan or advances to any other person, except for (x) will preclude the fiduciaries any loan or advance to any employee of the 401(k) Plan from purchasingCompany in the ordinary course of business not to exceed $10,000, or selling (y) any loan or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of advance to any Officer Shareholder will be deemed the consent of Parent.other person not to exceed $50,000; or
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(a) of the Company Disclosure ScheduleLetter, or the Company shall, and shall cause each of its Subsidiaries to conduct the Company’s and each such Subsidiary’s business in the ordinary course consistent with past practice and use its commercially reasonable efforts to preserve in all material respects its business organization and maintain in all material respects existing relations and goodwill with Governmental Entities, customers, suppliers, creditors, lessors, officers and employees.
(iiib) as otherwise consented Subject to by Parent with respect to the exceptions contained in clauses (Ai) through (iv) of Section 5.1(a), between the date hereof and (B) below the earlier of the Effective Time and the Termination Date, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company willshall not, and will cause each shall not permit any of its Subsidiaries to (it being understood and hereby agreed that if any action is expressly permitted by any of the following clauses or such action is specifically set forth on Section 5.1(b) of the Company Disclosure Letter, such action shall be expressly permitted under Section 5.1(a)):
(i) amend its articles of incorporation or bylaws or other applicable governing instruments;
(ii) split, combine, subdivide or reclassify any shares of capital stock or other equity interests of the Company or any of its subsidiaries except as permitted by this Agreement;
(iii) issue, sell, pledge, grant, transfer, encumber or otherwise dispose of any shares of capital stock or other equity interests of the Company or any of its Subsidiaries, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire (or valued, in whole or in part, in reference to), any shares of capital stock or equity interests of the Company or any of its Subsidiaries or create any non-wholly owned Subsidiaries of the Company (other than (A) conduct its business in all material respects the issuance of Shares upon the settlement of Company Options or Company RSU Awards outstanding as of the date hereof or (B) by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company in the ordinary course of business);
(iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to its capital stock or other equity interests (except dividends or other distributions paid by any direct or indirect wholly-owned Subsidiary to the Company or to any other direct or indirect wholly-owned Subsidiary of the Company in the ordinary course of business);
(v) purchase, redeem or otherwise acquire any shares of its capital stock or any other of its equity securities or any rights, warrants or options to acquire any such shares or other equity securities, other than in the ordinary course of business and consistent with past practices, and in each case, (A) in connection with the issuance of Shares upon the net exercise of Company Options or net settlement of Company RSU Awards (including in connection with withholding for Taxes) outstanding as of the date hereof or upon the forfeiture, cancellation, retirement or other deemed acquisition of awards issued under the Company Benefit Plans not involving any payment of cash or other consideration therefor, (B) in satisfaction of obligations pursuant to contracts existing as of the date hereof and set forth on Section 5.1(b)(v) of the Company Disclosure Letter (true, correct and complete copies of which have been provided to Parent prior to the date hereof), or (C) in transactions solely between the Company and any direct or indirect wholly-owned Subsidiaries of the Company or among direct or indirect wholly-owned Subsidiaries of the Company;
(vi) make any acquisition (whether by merger, consolidation, or acquisition of stock or assets) of any interest in any Person or any division or assets thereof in any transaction or series of related transactions, other than (A) acquisitions pursuant to contracts in effect as of the date of this Agreement and set forth on Section 5.01(b)(vi) of the Company Disclosure Letter, true, correct and complete copies of which have been provided to Parent prior to the date hereof, (B) purchases of supplies in the ordinary course of business and consistent with past practice or (C) acquisitions in consideration of forbearance on, or restructuring, of existing loans to or payment obligations from third parties with respect to those contracts disclosed in Section 5.1(b)(vi) of the Company Disclosure Letter;
(vii) become an obligor under any surety bonds or other guarantees of performance, other than those entered into after the date hereof in the ordinary course of business and consistent past practice;
(viii) 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 the ordinary course of business), other than loans, advances, capital contributions or investments in the ordinary course of business and consistent with past practices pursuant to contracts in effect as of the date of this Agreement and set forth on Section 5.1(b)(viii) of the Company Disclosure Letter, true, correct and complete copies of which have been provided to Parent prior to the date hereof; provided, that none of such investments may constitute a transaction of the type referred to in clause (vi) above;
(ix) make any capital expenditures, other than capital expenditures made in the ordinary course of business and consistent with past practice in an amount per fiscal quarter not to exceed $10,000,000;
(x) incur or assume any Indebtedness, other than (A) Indebtedness under the Company’s existing credit facilities in the ordinary of course of business and consistent with past practice and (B) in order to refinance any existing Indebtedness at the maturity thereof or at any time starting two (2) months prior to the date such Indebtedness would become a current liability on the balance sheet of the Company on terms substantially similar in the aggregate to the Company given then current market conditions; provided, that all such Indebtedness incurred pursuant to clauses (A) and (B) may be repaid in full at the Closing without penalty or premium;
(xi) settle or compromise any litigation, claim or other proceeding against the Company or any of its Subsidiaries other than settlements or compromises where the amounts paid or payable by the Company or any of its Subsidiaries in settlement or compromise of any such litigation, claim or other proceeding do not exceed $1,250,000 in the aggregate, so long as such settlement or compromise (A) would not impose any material non-monetary obligations on the Company or its Subsidiaries or any of their respective assets or the conduct of any of their respective businesses and (B) is not in connection with Shareholder Litigation or any litigation, claim or other proceeding related to the transactions contemplated by this Agreement;
(xii) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any of its material assets, other than (A) sales, leases and licenses in the ordinary course of business, (B) dispositions of assets no longer used in the operation of the business, (C) sales, leases and licenses that are not material to the Company and its Subsidiaries, taken as a whole, or (D) factoring of accounts receivable pursuant to contracts in effect as of the date of this Agreement, true, correct and complete copies of which have been provided to Parent prior to the date hereof; provided, that at least 75% of the consideration received for all such transactions in the aggregate consists of cash;
(xiii) except as required by applicable Law, (A) increase the compensation or other benefits payable or provided to the Company’s directors or executive officers (other than the payment of bonuses earned in respect of fiscal year 2014 under and in accordance with the terms of the Company’s annual management incentive plan in effect as of the date of this Agreement (based on actual performance and without exercising any positive discretion) in the ordinary course of business consistent with past practice), (B) except in the ordinary course of business consistent with past practice, increase the compensation or other benefits payable or provided to the Company’s employees that are not directors or executive officers, (C) establish, adopt, enter into or materially amend any Company Benefit Plan or plan, agreement or arrangement that would have been a Company Benefit Plan had it been in effect on the date hereof (other than the adoption of the Company’s annual management incentive plan in respect of fiscal year 2015 and the award of incentive opportunities thereunder of up to $5,906,452 in the aggregate), or (D) except pursuant to a retention plan adopted pursuant to Section 5.6(d), modify any severance, retention, change in control, pension, incentive or retirement arrangement;
(xiv) adopt or enter into a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation or other reorganization of the Company or any of its Subsidiaries (other than (A) the Merger or (B) use commercially reasonable efforts the matters set forth on Section 5.1(b)(xiv) of the Company Disclosure Letter);
(xv) make or change any material Tax election, adopt or change any material accounting method with respect to Taxes, change any annual Tax accounting period, file any material amended Tax Return, enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any predecessor provision or similar provision of state, local or foreign Law) with respect to Taxes, settle or compromise any proceeding with respect to any material Tax claim or assessment, surrender any right to claim a material refund of Taxes, seek any Tax ruling from any taxing authority, or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment;
(xvi) enter into, or amend in a manner materially adverse to the Company or its Subsidiaries, any Related Party Transaction;
(xvii) (A) materially amend or modify, terminate or grant a waiver of any material rights under any Company Material Contract (other than in the ordinary course of business in the case of contracts described in clauses (i), (iii), (v), (vi) or (vii) of the definition of such term; provided that, in the case of contracts described in clause (vii) of such definition, this clause (xvii) shall not supersede clause (xiii) above) or (B) enter into a new contract (other than in the ordinary course of business in the case of contracts described in clauses (i), (v), (vi) or (vii) of the definition of such term) that (x) would have been a Company Material Contract if it had been in effect on the date hereof or (y) contains, unless required by applicable Law, a change in control provision in favor of the other party or parties thereto that would prohibit, or give such party or parties a right to terminate such agreement as a result of, the Merger or would otherwise require a material payment to or give rise to any material rights to such other party or parties in connection with the transactions contemplated hereby;
(xviii) fail to maintain in full force and preserve intact effect any Company Insurance Policies or replacements therefor in a form and amount consistent with past practice;
(xix) except as may be required by a change in GAAP, make any material change in its business organization financial accounting principles, policies, or practices; or
(xx) agree, authorize or commit to do any of the foregoing.
(c) From and advantageous business relationships after the date hereof and prior to retain the services of its key officers and key employeesEffective Time or the Termination Date, if any, and except (Ci) as may be otherwise required by applicable Law or (ii) as expressly contemplated or permitted by this Agreement, Parent and Merger Sub shall take no action which is intended to or which would reasonably be expected to materially and adversely affect or materially delay the ability of any of the Parties to obtain parties hereto from obtaining any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions transactions contemplated hereby, performing its covenants and agreements under this Agreement or consummating the transactions contemplated hereby or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality consummation of the foregoing, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plantransactions contemplated hereby.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Pike Corp)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time earlier of the date on which a majority of the Company’s directors are designees of Parent or Merger Sub or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.18.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) writing by Parent, with the prior written consent of the Company Disclosure ScheduleParent, or (iii) as otherwise consented to expressly contemplated, required or permitted by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)this Agreement, the Company will, shall and will shall cause each of its Subsidiaries to (Ax) conduct its business in all material respects in the ordinary course consistent with past practice, practice and (By) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between From and after the date hereof and prior to the Effective Timeearlier of the date on which a majority of the Company’s directors are designees of Parent or Merger Sub or the Termination Date, except (i) as set forth in Section 5.1(b) 6.1 of the Company Disclosure ScheduleLetter, (ii) or as Parent may consent in writing (which consentexpressly contemplated, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned required or delayed) or (iii) as otherwise expressly contemplated permitted by this Agreement, without the Company will and will cause each prior written consent of its Subsidiaries not toParent, the Company:
(i) adjustshall not, split, combine or reclassify and shall not permit any capital stock or otherwise amend the terms of its capital stock;
Subsidiaries to, (iix) make, declare or pay any dividenddividends on or make other distributions in respect of any of its capital stock, or make set aside funds therefor, (y) split, combine or reclassify any of its capital stock, or issue, authorize or propose the issuance of any other distribution onsecurities in respect of, in lieu of or in substitution for, shares of its capital stock, or directly or indirectly (z) redeem, purchase repurchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for encumber any shares of its capital stock, except (A) for dividends paid by or any direct rights, warrants or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock such shares, except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with required by the terms of such instruments as of its securities outstanding or any Company Benefit Plan in effect on the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiaryset aside funds therefor;
(vii) purchaseshall not, selland shall not permit any of its Subsidiaries to, transfer(x) grant any options, mortgagewarrants or other rights to purchase shares of capital stock, encumber or otherwise dispose (y) amend the terms of or reprice any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of Option outstanding on the date of this Agreement or amend the terms of the Company Stock Plans; provided, however, that, notwithstanding the foregoing, from and after the date of this Agreement the Company shall be entitled to grant Restricted Shares under the VistaCare, Inc. 1998 Stock Option Plan, solely utilizing the form of Restricted Stock Award Agreement attached to Section 6.1(b)(ii) of the Company Disclosure Letter, to employees (other than any executive officers or directors of the Company) of the Company or any of its Subsidiaries hired after the date hereof in the ordinary course of business consistent with past practice, subject to the following limitations: (x) no such newly hired employee shall be granted more than 400 Restricted Shares after the date hereof, (y) the aggregate number of Restricted Shares granted to newly hired employees pursuant to this proviso shall not exceed 3000 Restricted Shares and (z) no such Restricted Stock Award Agreement shall be amended or modified by the Company without the prior written consent of Parent;
(iii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any of 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 or take any action to cause to be exercisable any otherwise unexercisable Company Stock Option under any existing Company Stock Plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of shares of capital stock in respect of any exercise of Company Stock Options outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 6.1(b), (B) the acquisition of Shares from a holder of a Company Stock Option or Restricted Shares in satisfaction of withholding obligations or in payment of the exercise price, and (C) the issuance of Restricted Shares solely in accordance with, and subject to the limitations set forth in, the proviso to Section 6.1(b)(ii);
(iv) shall not, and shall not permit any of its Subsidiaries to, amend or waive, or propose to amend or waive, any provision of its certificate of incorporation or by-laws or similar organizational documents;
(v) shall not, and shall not permit any of its Subsidiaries to, (w) merge or consolidate with, or acquire any equity interest in (including, without limitation, through the creation of any Subsidiary of the Company), any Person, or enter into an agreement with respect thereto, (x) acquire or agree to acquire any material assets, except for capital expenditures otherwise permitted by Section 6.1(b)(xv), (y) make any loan or advance to, or otherwise make any investment in, any Person, or (z) enter into any joint venture, partnership or other similar arrangement;
(vi) incurexcept for the planned Hospice divestitures disclosed in Section 6.1 of the Company Disclosure Letter which are consummated in accordance with the terms set forth for such divestitures in Section 6.1 of the Company Disclosure Letter, shall not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange, swap, mortgage, encumber or otherwise dispose of, or agree to sell, lease (whether such lease is an operating or capital lease), license, transfer, exchange, swap, mortgage, encumber or otherwise dispose of, any of its material assets;
(vii) shall not authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger consolidation, restructuring, recapitalization or other reorganization;
(viii) shall not, and shall not permit any of its Subsidiaries to, except as may be required by Law or pursuant to any of the Company Benefit Plans existing on the date of this Agreement, (A) grant any increases in the compensation (including, without limitation, salary, bonus and other benefits) of any of its directors, officers or key employees; (B) pay or agree to pay any pension, retirement allowance or other employee benefit to any director, officer or employee, whether past or present; (C) enter into any new, or materially amend any existing, employment, change of control, severance or termination agreement or arrangement with any Person; (D) become obligated under any new Company Benefit Plan, which was not in existence on the date hereof, or amend any such plan or agreement in existence on the date hereof if such amendment would have the effect of materially enhancing any benefits thereunder; (E) establish, adopt or enter into any collective bargaining agreement; (F) grant any general increase in compensation (including, without limitation, salary, bonus and other benefits) to employees, except for increases occurring in the ordinary course of business consistent with past practice; or (G) enter into, make or extend any loans or advances to any of its directors, officers, employees, agents or consultants, except for ordinary course of business advances for business related expenses;
(ix) shall not, and shall not permit any of its Subsidiaries to, (A) assume, guarantee, prepay incur or become obligated with respect to liable for or prepay any indebtedness for borrowed money (directly, contingently or offerotherwise), place (B) guarantee any such indebtedness, (C) issue or arrange sell any issue of debt securities or warrants or rights to acquire any debt securities, (D) guarantee any debt obligations of any other Person, (E) enter into any lease (whether such lease is an operating or capital lease), (F) create any Lien (other than Permitted Liens) on the property of the Company, or (G) enter into any “keep well” or other agreement or arrangement to maintain the financial condition of any other Person;
(x) shall not, and shall not permit any of its Subsidiaries to, (A) except as permitted by clause (B), modify, rescind, terminate, waive, release or otherwise amend in any material respect any of the foregoing terms or provisions of any Material Contract, (B) fail to renew any Material Contract on terms that is are no less favorable to the Company than under the existing contract, or (C) except for contracts described under Section 4.20(a)(xi) and entered into in the ordinary course of the Company’s business and in accordance with past practice, enter into any Contract that would have been required to be disclosed pursuant to working Section 4.20 of the Company Disclosure Letter if it had been entered into on or prior to the date of this Agreement;
(xi) shall not, and shall not permit any of its Subsidiaries to, except for the transactions set forth in Section 6.1(b)(xi) of the Company Disclosure Letter, all of which have been previously approved by the Board of Directors, enter into any real property lease, sublease or other agreement concerning real property or modify, renew or terminate any existing Lease;
(xii) shall not, and shall not permit any of its Subsidiaries to, except for the opening of any new Hospice Services locations which are currently planned or in process, all of which are listed in Section 6.1(b)(xii) of the Company Disclosure Letter, open any new office location;
(xiii) shall not, and shall not permit any of its Subsidiaries to, other than as required by the SEC, Law or GAAP, make any changes with respect to accounting policies, procedures or practices or any of its methods of reporting revenue, deductions, income or other material items for financial accounting purposes;
(xiv) shall not, and shall not permit any of its Subsidiaries to, make any material change (or file any such change) in any method of Tax accounting or make any material change in any Tax election; settle or compromise any material Tax liability for an amount materially in excess of the amount reserved therefor on the financial statements included in the Designated SEC Reports; or enter into any closing agreement relating to Taxes for an amount materially in excess of the amount reserved therefor on the financial statements included in the Designated SEC Reports;
(xv) shall not, and shall not permit any of its Subsidiaries to, incur capital borrowings expenditures in excess of (i) $75,000 individually and (ii) $300,000 in the aggregate;
(xvi) shall not, and shall not permit any of its Subsidiaries to, deposit or letter otherwise invest any cash on hand into accounts, securities or other instruments having a maturity of credit issuances under more than 30 days or that will impose payment or penalty upon liquidation within 120 days of such deposit or investment;
(xvii) shall not, and shall not permit any of its Subsidiaries to, transfer or license to any Person or entity or otherwise extend, amend or modify in any material respect any rights to any material Company Intellectual Property, other than non-exclusive licenses in the ordinary course of business and consistent with past practice;
(xviii) shall not, and shall not permit any of its Subsidiaries to, fail to use its reasonable best efforts to maintain in effect existing credit facilitiesinsurance policies or comparable replacement policies to the extent available for a reasonable cost;
(xix) shall not, in each caseand shall not permit any of its Subsidiaries to, enter into, amend or modify any agreement or arrangement with affiliates, directors or officers of the Company or any of its Subsidiaries or any of their family members (including spouses);
(xx) shall not waive, release, assign, settle, compromise or dispose of any Claim, except for the waiver, release, assignment, settlement, compromise or disposition of Claims in the ordinary course of business consistent with past practice and would which do not reasonably be expected to delay, adversely affect involve (A) any restriction or impede Parentlimitation on the Company’s or any of its Subsidiaries’ ability to obtain conduct their business as it is currently being conducted or (B) any settlement payment by, or liability of, the Financing;
(vii) except as specifically contemplated Company, its Subsidiaries or any of their Affiliates in Section 5.1(b) of the Company Disclosure Schedule, make any investment an amount in excess of $5,000,000 50,000 for an individual Claim, or $400,000 in the aggregate for all Claims;
(xxi) shall not, and shall not permit any of its Subsidiaries to, take any action or fail to take any action which would, or would be reasonably likely to, individually or in the aggregate, whether by purchase prevent, materially delay or materially impede the ability of stock Parent or securities of, contributions Merger Sub to capital to, consummate the Offer or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of Company to consummate the Merger or the other transactions contemplated by this Agreement;
(ixxxii) except in the ordinary course of business consistent with past practiceshall not, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts and shall not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or permit any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect Subsidiaries to, agree to or make any equity commitment to, whether orally or equity-based awardsin writing, take any actions prohibited by this Agreement; and
(Dxxiii) establish or cause the funding of any “rabbi trust” or similar arrangementshall not agree to take, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practicetake, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change resolutions of its Board of Directors in its Tax or financial accounting principlessupport of, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b6.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries and affiliates, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or of this Agreement until the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.16.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, (iii) as may be contemplated, required or permitted by this Agreement or (iv) as set forth in Section 5.1(a) 4.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, covenants and will cause each agrees with Parent that the business of the Company and its Subsidiaries to (A) conduct its business in all material respects shall be conducted in the ordinary course consistent with past practiceof business; provided, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employeeshowever, and (C) take that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 4.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting Subject to the generality exceptions contained in clauses (i) through (iv) of Section 4.1(a), the foregoingCompany covenants and agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof of this Agreement and the Effective Time, except (i) as set forth in Section 5.1(b) earlier of the Company Disclosure ScheduleEffective Time and the Termination Date, (ii) as Parent may without the prior written consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementParent, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid or made by Subsidiaries to the Company;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another which remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(viii) purchaseexcept (A) as required by existing written agreements or Company Benefit Plans, sellor (B) for employee retention agreements to be entered into between the Company and certain employees, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value which such agreements will not result in the payment by the Company in excess of $1,000,000 850,000, plus the Company’s share of employment taxes thereon, in the aggregate aggregate, or (C) bonuses paid to any Person employees for the period between July 1, 2008 and Closing, which amount shall not exceed $350,000 in the aggregate, or (other than D) for a non-contingent special bonus payable to a wholly owned Subsidiary)Xxxxxx Xxxxxxx not to exceed $110,000, other than encumbrancesplus the Company’s share of employment taxes thereon, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or (E) in the ordinary course of business consistent with past practicepractice (which, for the avoidance of doubt, shall include, without limitation, the payment of cash bonuses at or about fiscal year end computed in the same manner paid in prior years and as reflected on Section 4.1(b)(iii) of the Company Disclosure Schedule, the payment of additional cash bonuses to directors consistent with past practice or in lieu of options granted in prior years, and fiscal year end merit raises of three and one half percent (3.5%) as of July 1, 2008), or as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (1) materially increase the compensation (salary, bonus or equity grants) or other benefits payable or provided to the Company’s directors or officers, (2) enter into any employment, change of control, separation, severance, retention or settlement agreement with any executive officer of the Company (except (w) to the extent necessary to replace an agreement with a departing employee, (x) for employment agreements terminable on less than thirty (30) days’ notice without penalty or payment which do not contain change of control, severance or retention provisions, (y) for severance agreements entered into with employees in the ordinary course of business in connection with terminations of employment; provided however, that such an agreement does not provide the employee party to the agreement with cash, benefits, and/or equity grants in a total amount exceeding the total compensation and benefits earned by the employee during the six (6) month period immediately preceding the termination, or (z) for at will agreements made with employees hired subsequent to the date of this Agreement which do not contain change of control, severance or retention provisions), or (3) except as permitted pursuant to clause (2) above, establish, adopt, enter into or 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, except, in each case, as would not result in a material increase in cost to the Company;
(iv) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) shall not, and shall not permit any of its Subsidiaries to, adopt any material amendments or modifications to, or repeals of, its certificate of incorporation or bylaws or similar applicable charter documents, except in the case of wholly owned Subsidiaries of the Company, in connection with mergers and consolidations between the Company and such Subsidiaries or between such Subsidiaries;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date of this Agreement), other than (A) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options outstanding on the date of this Agreement or as may be granted after the date of this Agreement as permitted under this Section 4.1(b), (B) issuances of shares of Company Common Stock in the ordinary course of business pursuant to the Company Benefits Plans, (C) the sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes, (D) the grant of equity compensation awards in the ordinary course of business consistent with past practice in accordance with the Company’s customary schedule, and (E) issuances of shares of Company Common Stock upon exercise of Company Warrants;
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries and except for purchases of shares of Company Stock at a price per share less than $2.51 per share, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(viii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offer, place or arrange any issue of debt securitiesotherwise), other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money, so long as the principal amount thereof is not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain increased and the Financing;
other terms and conditions thereof are not materially less favorable than the existing terms of such indebtedness (viiC) except as specifically contemplated in Section 5.1(b) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 4.1(b), (D) indebtedness for borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement and (E) indebtedness for borrowed money not to exceed $500,000 in aggregate principal amount outstanding at any time incurred by the Company Disclosure Schedule, make or any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, its Subsidiaries other than acquisitions pursuant to Contracts in effect as of the date of this Agreementaccordance with clauses (A)-(D), inclusive;
(ix) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets, including the capital stock of Subsidiaries, other than in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into practice and except pursuant to existing agreements in effect prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer execution of value in excess of $1,000,000 in the aggregate in any yearthis Agreement;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (Aset forth on Section 4.1(b)(x) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or Disclosure Schedule, shall not, and shall not permit any of its SubsidiariesSubsidiaries to, except for increases modify, amend, terminate or waive any rights under any Company Material Contract in base salary any material respect in a manner which is adverse to the Company other than in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoingbusiness;
(xi) except as set forth on Section 4.1(b)(xi) of the Company Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries to, enter into any Company Material Contracts other than in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amountbusiness;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI shall not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company or any of its Subsidiaries (other than the Merger);
(xvixiii) implement shall not voluntarily change or adopt remove the certified public accountants for the Company or change any material change in its Tax or financial of the accounting principlesmethods, policies, procedures, practices or methods, other than as may be principles used by the Company unless required by GAAP or applicable Lawthe SEC;
(xviixiv) (A) makeshall not modify the terms of, change discount, setoff or revoke accelerate the collection of, any material Tax electionaccounts receivable, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, except in the case ordinary course of each of (C) or (D) in excess of $1,000,000business consistent with past practice;
(xviiixv) shall not pay accounts payable and other obligations and liabilities other than in the ordinary course of business consistent with past practice;
(xvi) shall not fail to maintain in all material respects inventory levels consistent with past practice for the businesses of the Company and each of its Subsidiaries;
(xvii) shall not make or commit to make aggregate capital expenditures in excess of $650,000;
(xviii) shall not settle any material pending claim or other material disagreement resulting in any payment of an amount in excess of $50,000 in the aggregate as to all such claims or disagreements;
(xix) shall not enter into, enter into directly or indirectly, any new, or materially amend or otherwise materially alter any current, agreement or obligations new material transaction with any Affiliate of the Company; orCompany (excluding transactions with the Subsidiaries in the ordinary course of business and consistent with past practice and agreements with directors and officers of the Company set forth on Schedule 4.1(b)(xix) of the Company Disclosure Schedule), including, without limitation, any transaction, agreement, arrangement or understanding that would be required to be reported as a Certain Relationship or Related Transaction or similar relationship or transaction pursuant to Statement of Financial Accounting Standards No. 57, or in any SEC filing pursuant to Item 404 of Regulation S-B;
(xixxx) shall not take, undertake, incur, authorize, commit or agree to take any action that would cause any of the representations or make warranties in Section 2 to be untrue in a manner that could or would cause any of the conditions to closing set forth in Section 5 not to be satisfied;
(xxi) shall not authorize, recommend, propose or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing; and
(xxii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of itself and its Subsidiaries and affiliates, that, between the date of this Section 5.1 Agreement and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Memry Corp)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law Law, (ii) with the prior written consent of Parent (which shall not be unreasonably withheld, delayed or conditioned), (iii) as expressly required contemplated or permitted by this Agreement or as permitted by Section 5.1(b), (iiiv) as disclosed in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company willshall, and will shall cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, employees and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain parties hereto from obtaining any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions transactions contemplated hereby, performing its covenants and agreements under this Agreement or consummating the transactions contemplated hereby or otherwise materially delay or prohibit consummation of the TransactionsMerger or other transactions contemplated hereby; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 5.1 shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(b) Without limiting the generality The Company agrees with Parent, on behalf of the foregoingitself and its Subsidiaries, that between the date hereof and the Effective Time, except as (i) as may be required by applicable Law, (ii) set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) Schedule or (iii) as otherwise expressly required or specifically contemplated by this Agreement, the Company will shall not, and will cause each shall not permit any of its Subsidiaries to, without the prior written consent of Parent (which shall not to:be unreasonably withheld, delayed or conditioned):
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans; provided, however, that each Restricted Subsidiary shall not be prohibited hereunder from (A) paying any dividend, or making any other distribution, on any shares of its capital stock held by the Company or any other Restricted Subsidiary or (B) directly or indirectly redeeming, purchasing or otherwise acquiring any shares of its capital stock held by the Company;
(iii) grant any Person person any right to acquire any shares of its capital stock;
(iv) issue any additional shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted stock options issued under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) except as is both in the ordinary course of business consistent with past practice and as would not reasonably be expected to delay, adversely affect or impede the Financing in any material respect, purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 25 million in the aggregate to any Person person (other than to a wholly owned Subsidiary); provided, however, that each Restricted Subsidiary shall not be prohibited hereunder from transferring any of its properties or assets to the Company or any other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practiceRestricted Subsidiary;
(vi) incur, assume, guarantee, prepay prepay, or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, both in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the FinancingFinancing in any material respect; provided, however, that each Restricted Subsidiary shall not be prohibited hereunder from repaying any indebtedness for borrowed money owing by it to the Company or any other Restricted Subsidiary or making any loans or advances to the Company or any other Restricted Subsidiary;
(vii) except as specifically contemplated is both in Section 5.1(b) the ordinary course of business consistent with past practice and as would not reasonably be expected to delay, adversely affect or impede the Company Disclosure ScheduleFinancing in any material respect, make any investment in excess of $5,000,000 25 million in the aggregate, whether by purchase of stock or securities of, contributions to capital to, property transfers to, or purchase of any property or assets of any other Personperson other than a wholly owned Subsidiary of the Company or any wholly owned Subsidiary thereof or as permitted under Section 5.1(b)(vi) above;
(viii) make any acquisition of another Person or businessbusiness in excess of $25 million in the aggregate, whether by purchase of stock or securities or securities, contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreementor property transfers;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract Contract, or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 5 million in the aggregate in any yearyear or $25 million over the term of the Contract;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or consultants, independent contractors or other service providers of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practicepractice (including, for this purpose, the normal employee salary, bonus and equity compensation review process conducted each year), (B) pay any pension, severance or retirement benefits to any employees, directors, consultants or consultants, independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practiceother service providers, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity stock options or equityother stock-based awards, (D) or other incentive compensation or establish or cause the funding of any “rabbi trust” trust or similar arrangement, (ED) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (FE) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of 10 million in the Company in excess of such amountaggregate;
(xii) amend or waive any provision of the Charter Documentsits certificate of incorporation or its by-laws or other equivalent organizational documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect (or in any respect in the case of representations and warranties qualified by Company Material Adverse Effect) at any time prior to the Effective Time, or in any of the conditions to the Merger set forth in Article VI not being satisfiedsatisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, Corporation or its Subsidiaries or its current or future Affiliates following the Effective TimeTime or that would in any way restrict the businesses of Parent or its Affiliates (excluding the Surviving Corporation and its Subsidiaries) or take any action that may impose new or additional regulatory requirement on any Affiliate of Parent (excluding the Surviving Corporation and its Subsidiaries);
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as consistent with or as may be required by GAAP GAAP, Law or applicable Lawregulatory guidelines;
(xvii) (A) make, change or revoke any material Tax election, (B) change any material method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, dispute or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Merger Agreement (Venoco, Inc.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the earlier of the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1 and except (i) as may be required by applicable Law, (ii) as may be consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed), (iii) as may be required by this Agreement, or (iv) as set forth in Section 5.1(a) of the Company Disclosure Letter, the Company shall, and shall cause each of its Subsidiaries to, use its commercially reasonable efforts to conduct the Company’s business in the ordinary course consistent with past practice and preserve in all material respects its business organization and maintain in all material respects existing relations and goodwill with Governmental Authorities, customers, suppliers, creditors, lessors, officers, employees and parties to any JV Agreement.
(b) Subject to the exceptions contained in clauses (i) through (iv) of Section 5.1(a), from and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Scheduleshall not, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each permit any of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain it being understood and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no hereby agreed that if any action which would materially and adversely affect or delay the ability of is expressly permitted by any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoingfollowing subsections, between the date hereof and the Effective Time, except (i) as set forth in such action shall be expressly permitted under Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v5.1(a), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:):
(i) adjust, split, combine amend its certificate of incorporation or reclassify any capital stock bylaws or otherwise amend the terms of its capital stockother applicable governing instruments;
(ii) makesplit, declare combine, subdivide or pay reclassify any dividendshares of capital stock of the Company or enter into any agreement with respect to the voting of the capital stock of the Company;
(iii) issue, sell, pledge, grant, transfer, encumber or make any other distribution on, otherwise dispose of or directly or indirectly redeem, purchase repurchase or otherwise acquire any shares of capital stock or encumberother equity interests of the Company or any of its Subsidiaries, 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 its capital stock of the Company or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except Subsidiaries (other than (A) for the issuance of shares of Common Stock upon the exercise of Company Options outstanding as of the date of this Agreement, (B) issuances or grants under the ESPP with respect to the offering period in effect on the date of this Agreement, (C) by a wholly-owned Subsidiary of the Company to the Company or another wholly-owned Subsidiary of the Company or (D) pursuant to net settlements or exercises of outstanding Company Options or Company Restricted Stock in satisfaction of the exercise price and/or Tax withholding relating to such award);
(iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to the Company’s capital stock (except dividends or other distributions paid by any direct or indirect wholly wholly-owned Subsidiary to the Company or to any other direct or indirect wholly wholly-owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary);
(v) purchasemake any acquisition (whether by merger, sellconsolidation, transfer, mortgage, encumber acquisition of stock or otherwise dispose assets or otherwise) of any properties interest in any Person or any business, line of business or division thereof (which for the avoidance of doubt shall not include ordinary course acquisitions of assets having a value in excess of $1,000,000 used in the aggregate to any Person operation of the Company’s business that are covered by clause (vi) below);
(vi) other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incurbusiness, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person any assets or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregateproperties, other than (A) acquisitions pursuant permitted to Contracts in effect as clause (v) above, (B) acquisitions of the date of this Agreement;
(ix) except inventory made in the ordinary course of business consistent with past practice, enter into, renew, extend, amend with a value or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value purchase price in excess of $1,000,000 in the aggregate or (C) assets in any yearrespect of capital expenditures permitted pursuant to clause (xiv) below;
(xvii) except make any loans, advances or capital contributions to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase investments in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of Person (other than the Company or any direct or indirect wholly-owned Subsidiary of its Subsidiariesthe Company), except for increases in base salary other than (A) trade credit advanced in the ordinary course of business consistent with past practice, (B) pay any severance loans, advances, capital contributions or retirement benefits to any employees, directors, consultants or independent contractors investments required by JV Agreements in effect as of the Company date of this Agreement or any of its Subsidiaries, except with respect (C) to officers, employees and directors for business and consultants travel expenses in the ordinary course of business consistent with past practice;
(viii) incur or assume any Indebtedness, other than borrowings in the ordinary course of business consistent with past practice under the Company’s existing credit facilities;
(Cix) accelerate settle or compromise any litigation, claim or other proceeding against the vesting ofCompany or any of its Subsidiaries other than (A) cash settlements or compromises and (B) ordinary course releases of liability, in each case not exceeding $150,000 individually or $1,000,000 in the lapsing aggregate;
(x) transfer, lease, license, sell, mortgage, pledge, dispose of forfeiture restrictions or conditions subject to any Lien (other than Permitted Liens) any of its material assets, other than (A) sales of inventory in the ordinary course of business consistent with respect to, past practice and (B) dispositions of used or obsolete assets no longer used in the operation of the business;
(xi) except as required by any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if Plans as in effect on the date hereof of this Agreement or (F) enter into, amend, alter, adopt, implement applicable Law or otherwise make any commitment the payment of quarterly bonuses to do any personnel in the ordinary course of business consistent with past practice and in accordance with terms and conditions provided to Parent as of the foregoing;
date of this Agreement, (xiA) increase the compensation or other benefits payable or provided to the Participants who are current or former directors or executive officers; (B) except in the ordinary course of business consistent with past practice, waiveincrease the compensation or other benefits payable or provided to the Participants who are not current or former directors or executive officers; or (C) establish, releaseadopt, assignenter into, settle amend (including acceleration of vesting or compromise payment), modify or terminate any claimCompany Benefit Plan or plan, action program, policy, agreement or proceeding, other than waivers, releases, assignments, settlements or compromises arrangement that involve only would have been a Company Benefit Plan had it been in effect on the payment date of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amountthis Agreement;
(xii) amend adopt or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization consolidation or other reorganization of such entitythe Company or any of its Subsidiaries (other than the Merger);
(xvixiii) implement or adopt except as may be required by a change in GAAP, make any material change in its Tax or financial accounting principles, practices policies or methods, other than as may be required by GAAP or applicable Lawpractices;
(xviixiv) make any capital expenditures that, in the aggregate, exceed the aggregate amount of expenditures provided for in the Company’s capital expenditure plan provided to Parent in writing prior to the date of this Agreement by more than $2,000,000;
(A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than normal vendor renewals, extensions or 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 Company Material Contract or (B) enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations Contract that, if entered into prior to the date of this Agreement, would qualify as a Company Material Contract under any of clauses (ii) or (v) through (xii) of Section 3.18(a) (it being understood that the renewal, extension or replacement of any Contract in the ordinary course of business consistent with past practice that contains terms described in those clauses shall be permitted if the Contract being renewed, extended or replaced contains such terms and the renewal Contract contains the same such terms or comparable terms that are no less favorable to the Company and its Subsidiaries);
(xvi) enter into any Affiliate 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; ordate of this Agreement;
(xixxvii) agree to take or (A) make any commitment to take change (or file any such change) in any material method of the actions prohibited Tax accounting (except as required by this Section 5.1(bapplicable law); provided, that nothing in this Section 5.1(b(B) will preclude the fiduciaries of the 401(k) Plan from purchasing, make or selling or otherwise disposing of, Common Shares change any material Tax election other than those in the open market in connection with administering ordinary course of business to be made on original Tax Returns required to be filed prior to the common stock fund being maintained in connection with said 401(kClosing; (C) Plan.
settle or compromise any material Tax liability or consent to any claim or assessment relating to a material amount of Taxes; (cD) For purposes file any amended Tax Return reflecting a material amount of this Section 5.1 and the definition income Taxes; or (E) enter into any closing agreement relating to a material amount of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.Taxes;
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof through the earlier of the Offer Closing and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated and abandoned pursuant to Section 7.18.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise may be consented to in writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be required or permitted by this Agreement or (iv) as set forth in Section 6.1(b) of the Company Disclosure Letter, the Company will, covenants and will cause each agrees with Parent that the business of the Company and its Subsidiaries to (A) conduct its business shall be conducted in all material respects in the ordinary course of business and, to the extent consistent with past practicetherewith, (B) the Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to maintain and preserve substantially intact its and its Subsidiaries’ business organization and advantageous business relationships and organization, to retain keep available the services of its key and its Subsidiaries’ current officers and key employees, to preserve its and (C) take its Subsidiaries’ present relationships with customers, suppliers, distributors, licensors, licensees, and other Persons having business relationships with it; provided that no action which by the 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 sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality of the foregoing, The Company agrees with Parent that between the date hereof and the Effective Timeearlier of the Offer Closing and the Termination Date, except (iA) as may be required by applicable Law, (B) as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (C) as may be required or permitted by this Agreement or (D) as set forth in Section 5.1(b6.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementLetter, the Company will shall not, and will cause each shall not permit any of its Subsidiaries not to:
(i) adjustauthorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends, dividend equivalents and distributions paid by a Subsidiary to the Company or another Subsidiary of the Company;
(ii) split, combine or reclassify any of its capital stock or otherwise amend issue or authorize or propose the terms issuance of any of its capital stock;
(ii) make, declare equity interests or pay any dividendother securities in respect of, in lieu of or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any in substitution for shares of its capital stock or equity interests, except for (A) any securities such transaction by a wholly-owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction or obligations convertible (whether currently convertible or convertible only after B) the passage issuance of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to Stock upon the exercise of stock options issued and outstanding as any Company Options or settlement of the date hereof under the Company Stock PlansRestricted Units;
(iii) grant except as required by any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and Benefit Plan in accordance with the terms of such instruments as of effect on the date hereof, and (CA) (1) increase the base salary, retainer or other fees or target bonus opportunities for any current or former director or executive officer of the Company, (2) increase the base salary or target bonus opportunities for the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person employees (other than to a wholly owned Subsidiarydirectors and executive officers), other than encumbrancesexcept for annual, acquisitions promotion-related or dispositions pursuant to Contracts in effect as of the date of this Agreement or merit-based salary increases in the ordinary course of business consistent with past practice;
, or (vi3) incurmaterially increase the benefits provided to the Company’s current or former directors, assumeexecutive officers, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, employees (other than increases resulting from routine changes to welfare benefit programs); (B) enter into any employment, change of control, severance or retention agreement with any employee, executive officer or director of the Company or any of its Subsidiaries (except for (1) an agreement with an employee (other than an executive officer of the foregoing that is pursuant Company) who has been hired on an “at will” basis to working capital borrowings or letter replace an employee with such an agreement without any material increase in compensation and benefits from the prior employee’s agreement, (2) separation agreements entered into with employees (other than executive officers of credit issuances under existing credit facilities, in each case, the Company) in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect in connection with terminations of employment or impede Parent’s ability to obtain (3) employment agreements (other than with executive officers of the Financing;
Company) terminable on no more than thirty (vii30) days’ notice without penalty or severance obligation); or (C) except as specifically contemplated in Section 5.1(bpermitted pursuant to clauses (A) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to(B) above, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except otherwise in the ordinary course of business consistent with past practice, enter into, renewestablish, extendadopt, amend materially amend, terminate or terminate (A) waive any Company Material Contract rights with respect to any collective bargaining agreement or Contract which if entered into prior to the date hereof would be a Company Material Contract any agreement with any labor organization or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any yearother employee representative;
(xiv) materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or applicable Law;
(v) adopt any amendments to its charter or bylaws or similar applicable organizational documents (including partnership agreements and limited liability company agreements) other than amendments to the organizational documents of any wholly owned Subsidiary of the Company that are not material to the business of the Company;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, issue, sell, pledge, dispose of or subject to the extent required by Law a Lien (other than a Permitted Lien) any shares of its or its Subsidiaries’ capital stock or any securities convertible into or exchangeable or exercisable for any such shares or take any action to cause to be exercisable any otherwise unexercisable Company Benefit Plan in effect Option (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable Company Option outstanding on the date hereof, including any applicable terms under any applicable employment agreement or severance plan), other than (A1) increase issuances of shares of Common Stock in any manner the compensation or benefits respect of any employeesexercise of Company Options and settlements of any Company Restricted Units or in respect of any dividend equivalent rights granted in respect of any such awards and (2) the acquisition or withholding of shares of Common Stock from a holder of a Company Option or Company Restricted Unit in satisfaction of withholding obligations or in connection with the payment of any exercise price;
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, officersdirectly or indirectly, directorspurchase, consultants redeem or independent contractors otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of shares of Common Stock (1) from a holder of a Company Option in satisfaction of withholding obligations or in payment of the exercise price or (2) from a holder of Company Restricted Unit(s) in satisfaction of withholding obligations upon the vesting or settlement of such awards;
(viii) incur, offer, place, arrange, syndicate, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), except for (1) any indebtedness for borrowed money among the Company and its Subsidiaries or among the Company’s Subsidiaries, (2) indebtedness for borrowed money incurred in replacement of any existing or maturing indebtedness (including related premiums and expenses), (3) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 6.1(b), (4) indebtedness for borrowed money incurred under or the issuance of letters of credit under the Receivables Agreements or pursuant to agreements in effect prior to the execution of this Agreement, and (5) indebtedness for borrowed money not to exceed $1,000,000 in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with clauses (1) through (4), inclusive;
(ix) except (1) for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, except for increases (2) pursuant to existing agreements in base salary effect prior to the execution of this Agreement and disclosed or made available to Parent prior to the date hereof, (3) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the Transactions or (4) sales or dispositions of properties or assets made in the ordinary course of business consistent with past practice, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (B) pay any severance including securitizations other than pursuant to the Receivables Agreements), or retirement benefits subject to any employeesLien (other than Permitted Liens) or otherwise dispose of any portion of its material properties or assets having a fair market value in excess of $500,000 in the aggregate;
(1) modify, directorsamend, consultants terminate or independent contractors of waive any rights under any Company Material Contract in any material respect in a manner which is adverse to the Company or any of its Subsidiaries, except with respect to officers, directors and consultants other than in the ordinary course of business consistent with past practice, or (C2) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, enter into any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement Contract that would be constitute a Company Benefit Plan Material Contract if in effect on entered into prior to the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except other than in the ordinary course of business consistent or in connection with past practicethe expiration or renewal of any Company Material Contract), waiveexcept the Company may enter into agreements providing for acquisitions or dispositions that are otherwise permitted under clauses (ix), release(xiii) and (xiv) of this Section 6.1(b);
(xi) voluntarily settle, assignpay, settle discharge or compromise satisfy (1) any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises Action that involve involves only the payment of monetary damages not in excess of $1,000,000 or 500,000 in the aggregate, excluding from such dollar thresholds amounts covered by any obligation or liability insurance policy of the Company or any of its Subsidiaries (provided, in excess no event shall the Company or any of its Subsidiaries be prevented from paying, discharging or satisfying (with prior notice to Parent if practicable) any judgment and the amount of any such amountpayment, discharge or satisfaction shall not be included in the foregoing dollar thresholds) or (2) any Action to which Section 6.12 applies;
(xii) amend except in the ordinary course of business or waive in a manner consistent with past practice, (1) make, change or revoke any provision material Tax election, (2) make a material change in any method of Tax accounting or (3) settle or compromise any material Tax proceeding, in each case, if such action would be reasonably likely to increase the Taxes of the Charter DocumentsCompany or its Subsidiaries following the Closing;
(xiii) take acquire (by merger, consolidation, purchase of stock or assets or otherwise) or agree to so acquire any action entity, business or assets that is intended constitute a business or would reasonably be expected to result division of any Person, or any material amount of assets from any other Person (excluding ordinary course purchases of goods, products, services and off-the-shelf Intellectual Property), other than acquisitions that do not exceed $500,000 in any of the conditions to the Merger set forth in Article VI not being satisfiedaggregate;
(xiv) enter into adopt any “non-compete” plan or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization restructuring or other reorganization of such entitythe Company or any of its Subsidiaries (other than the Merger or in compliance with Section 6.4 and Article VIII of this Agreement);
(xv) enter into or amend any material transaction with any Affiliate (other than transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries); provided, that the payment of compensation and benefits in the ordinary course or pursuant to existing Contracts to directors, officers and employees shall not be deemed to be a “transaction” with an Affiliate for purposes of this Section 6.1(b)(xv), it being understood that this Section 6.1(b)(xv) (including this proviso) shall not be read to narrow Section 6.1(b)(iii); and
(xvi) implement agree, in writing or adopt otherwise, to take any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;of the foregoing actions.
(xviic) Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the Company and each of its Subsidiaries shall be permitted to take any COVID Actions, and in no event shall the taking of such COVID Actions constitute a breach of this Agreement.
(Ad) makeParent and Merger Sub agree with the Company, change on behalf of themselves and their Subsidiaries and Affiliates, that, between the date hereof and the earlier of the Effective Time and the Termination Date, Parent and Merger Sub shall not, and shall not permit any of their Subsidiaries or revoke Affiliates to, take or agree to take any material Tax electionaction (including entering into agreements with respect to, or consummating, any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to (i) result in, individually or in the aggregate, a Parent Material Adverse Effect, (Bii) change any method of reporting for Tax purposes, (C) settle hinder or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxesdelay, in the case of each of (C) entering into agreements with respect to, or consummating, any acquisitions, mergers, consolidations or business combinations, or otherwise hinder or delay in any material respect, the obtaining of, or result in not obtaining, any consent, clearance, approval, authorization or permit from a Governmental Entity necessary to be obtained prior to Closing, or (Diii) in excess of $1,000,000;
(xviii) other than in hinder or delay the ordinary course of business consistent with past practice, enter into any new, expiration or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent termination of any Officer Shareholder will be deemed required waiting period under the consent of ParentHSR Act or any other applicable Antitrust Law.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the earlier of the Effective Time or and the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law Law, any Governmental Entity of competent jurisdiction or as expressly required by this Agreement the rules or as permitted by Section 5.1(b)regulations of the NASDAQ Stock Market, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be expressly contemplated or required by this Agreement, (iv) as set forth in Section 5.1(a) of the Company Disclosure Letter, or (v) as may be necessary or commercially reasonable and generally consistent with actions taken by substantially similarly situated organizations in response to the same, in response to any COVID-19 Measures or Russia Sanctions, the Company willshall, and will shall cause each of its Subsidiaries to, use commercially reasonable efforts to (A) conduct its business in all material respects in the ordinary course of business consistent with past practicepractice and to the extent consistent therewith, preserve satisfactory business relationships with its suppliers, customers, distributors and other Persons having material business relationships with it; provided, however, that, without limitation to any provision of Section 5.1(b), this sentence shall in no event prohibit (A) termination of any current or former employee of any Acquired Company in the ordinary course of business consistent with past practices, or (B) use commercially reasonable efforts to maintain allowing any Company Contracts with employees, service providers, suppliers, customers, distributors, and preserve intact its business organization and advantageous other Persons having business relationships with the Acquired Companies to expire in accordance with their terms in the ordinary course of business and to retain the services of its key officers and key employeesconsistent with past practices; provided, and (C) take further, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality of the foregoing, between From and after the date hereof and prior to the earlier of the Effective TimeTime and the Termination Date, and except (iv) as may be required by applicable Law, any Governmental Entity of competent jurisdiction or the rules or regulations of the NASDAQ Stock Market, (w) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (x) as may be expressly contemplated or required by this Agreement, (y) as set forth in Section 5.1(b) of the Company Disclosure Schedule, Letter or (iiz) as Parent may consent be necessary or commercially reasonable and generally consistent with actions taken by substantially similarly situated organizations in writing (which consentresponse to the same, with respect in response to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned COVID-19 Measures or delayed) or (iii) as otherwise expressly contemplated by this AgreementRussia Sanctions, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries to, authorize, declare or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except for (A) the authorization and payment by the Company of dividends, consistent with past practice, at a rate not to exceed a quarterly rate of $0.28 per Share and with record and payment dates consistent with past practice of the Company during the prior 12 months, or (B) dividends and distributions paid by wholly owned Subsidiaries of the Company to the Company or to any of its wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or otherwise amend other securities of any Acquired Company or issue or authorize or propose the terms issuance of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution onsecurities in respect of, in lieu of or directly or indirectly redeem, purchase or otherwise acquire or encumber, any in substitution for shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable such other securities, except for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another that remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(viii) purchase, sell, transfer, mortgage, encumber except as required by Company Benefit Plans or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts Collective Bargaining Agreements as in effect as of on the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incurhereof, assumeshall not, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than and shall not permit any of its Subsidiaries to (A) increase the foregoing that is pursuant compensation or other benefits (including, without limitation, bonus, severance, change in control, retention, retirement or termination pay or benefits) payable or provided to working capital borrowings or letter of credit issuances under existing credit facilitiesthe Company’s Service Providers, in each case, except for annual merit-based and promotion-based increases effected in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in expressly set forth on Section 5.1(b) of the Company Disclosure ScheduleLetter, (B) enter into any employment, change of control, severance, retirement or retention agreement with any current or former Service Provider of the Company or any of its Subsidiaries, (C) establish, adopt, enter into or materially amend or terminate any Company Benefit Plan or Collective Bargaining Agreement, other than amendments expressly set forth on Section 5.1(b) of the Company Disclosure Letter, (D) recognize any new union, works council or similar employee representative with respect to any current or former Service Provider, (E) grant any equity or equity-based awards to any current or former Service Provider, or discretionarily accelerate the vesting or payment of any Company Equity Award (including taking action to deem satisfied any performance goals prior to the end of the performance period in existence as of the date hereof, other than as required by Section 2.3(a)), (F) hire any employees who upon hire, would be a Key Employee or (G) terminate the employment of any Key Employee (other than the termination of any such employee for cause);
(iv) shall not, and shall not permit any of its Subsidiaries to, enter into or make any investment loans or advances or capital contributions to, any other Person (other than (A) in the ordinary course of business, including any such loans or advances to any of its directors, employees, agents or consultants or (B) any loans, advances or capital contributions to any wholly owned Subsidiary of the Company) or make any change in its existing borrowing or lending arrangements for or on behalf of any or such Persons, except as required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP or SEC rule or policy;
(vi) except as required by the rules or requirements of any stock exchange or as to comply with Section 3.24, shall not(A) adopt any amendments to the Company’s certificate of incorporation or bylaws or any other organizational documents or (B) permit any of the Company’s Subsidiaries to amend its applicable organizational documents except, in the case of this clause (B), for any changes that would not be adverse to Parent in any material respect;
(vii) shall not, and shall not permit any of its Subsidiaries to, acquire, directly or indirectly any assets, securities, properties or businesses for an amount in excess of $5,000,000 10,000,000 individually or $25,000,000 in the aggregateaggregate (for the Company and all of its Subsidiaries), whether by purchase of stock or securities ofother than supplies, contributions to capital toequipment, inventory, or purchase products in the ordinary course of any property or assets of any other Personbusiness;
(viii) make except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any acquisition of another Person its Subsidiaries to, issue, sell, pledge, dispose of or businessencumber, whether by purchase or authorize the issuance, sale, pledge, disposition or Lien of, any shares of its capital stock or other securities or contributions to capital in excess of $5,000,000 ownership interests in the aggregateCompany or any Subsidiaries of the Company or any securities convertible into, other than acquisitions exercisable for or exchangeable for any such shares, securities or ownership interests or take any action to cause to be vested any otherwise unvested Company Equity Award (except as otherwise required by the terms of this Agreement or required pursuant to Contracts the express terms of any such Company Equity Award, in effect each case, outstanding as of the date of this Agreement, provided that, for the avoidance of doubt, the Company and its Subsidiaries shall not discretionarily accelerate the vesting or payment of any Company Equity Award, as provided in Section 5.1(b)(iii) above), other than (A) issuances of Shares in respect of any exercise of or settlement of Company Equity Awards outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b) and (B) sales or issuances of shares of Common Stock pursuant to the Company ESPP in accordance with its terms or Section 2.3(b) of this Agreement;
(ix) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or other securities or ownership interests in any Acquired Company or any rights, warrants or options to acquire any such shares, securities or interests, other than the ordinary course acquisition of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be Shares from a holder of a Company Material Contract Equity Award in satisfaction of withholding obligations or (B) any Contracts not in the ordinary course, involving the commitment or transfer payment of value in excess of $1,000,000 in the aggregate in any yearexercise price;
(x) shall not, and shall not permit any of its Subsidiaries to, incur, assume, or guarantee, any Indebtedness, except for (A) any Indebtedness among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) any indebtedness for borrowed money to the extent required on a dollar-for-dollar basis incurred to replace, renew, extend or refinance any existing indebtedness for borrowed money of the Company or its Subsidiaries (including such indebtedness to the extent on a dollar-for-dollar basis incurred to repay or refinance related fees, expenses, premiums and accrued interest), (C) guarantees or credit support provided by Law the Company or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors its Subsidiaries for indebtedness for borrowed money of the Company or any of its Subsidiaries, to the extent such indebtedness is (I) in existence on the date of this Agreement or (II) incurred in compliance with this Section 5.1(b)(x), (D) Indebtedness incurred pursuant to agreements in effect prior to the execution of this Agreement and disclosed on the Company Balance Sheet, including the Company Credit Agreement and (E) Indebtedness not to exceed $10,000,000 individually and $50,000,000 in aggregate principal amount outstanding at any time incurred by the Company and all of its Subsidiaries other than in accordance with clauses (A) through (D);
(xi) except for increases in base salary transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, sell, lease, assign, license, sublicense, convey, transfer, exchange or swap, or subject to any Lien (other than Permitted Liens) or otherwise dispose of, abandon, permit to lapse or fail to maintain any material portion of its material properties or assets, including the capital stock of Subsidiaries, except for (A) inventory sales, obsolete assets or non-exclusive licenses in the ordinary course of business consistent with past practice, (B) pay pursuant to existing agreements in effect prior to the execution of this Agreement that are Made Available to Parent (or refinancings thereof permitted pursuant to Section 5.1(b)(x)(B)), or (C) as may be required by any severance Governmental Entity in order to permit or retirement benefits facilitate the consummation of the transactions contemplated by this Agreement;
(xii) shall not, and shall not permit any of its Subsidiaries to, enter into, modify, amend, terminate (other than expiration in accordance with their terms) or waive any rights under any Material Contract, except any modifications or amendments made in the ordinary course of business and in a manner that is not adverse to the Company in any material respect;
(xiii) shall not, and shall not permit any of its Subsidiaries to, settle, pay, discharge or satisfy any Action, other than (x) any Action relating to Taxes or (y) any Action that (A) does not relate to any employeesAction brought by the stockholders of the Company against the Company and/or its directors relating to the transactions contemplated by this Agreement or a breach of this Agreement or any other agreements contemplated by this Agreement, directors(B) the settlement, consultants payment, discharge or independent contractors satisfaction of which does not result in the imposition of equitable or other non-monetary relief on, or the admission of wrongdoing by, the Company or any of its Affiliates and (C) (1) results solely in a monetary obligation involving only the payment of monies by the Company and its Subsidiaries of not more than $5,000,000 individually and $20,000,000 in the aggregate (for the Company and all of its Subsidiaries) (excluding any settlements made under the following clause (2)); (2) results solely in a monetary obligation that is funded by an indemnity obligation to, or an insurance policy of, the Company or any of its Subsidiaries and the payment of monies by the Company or any of its Subsidiaries that are not more than $5,000,000 individually and $20,000,000 in the aggregate (for the Company and all of its Subsidiaries) (not funded by an indemnity obligation or through insurance policies); or (3) that results in no monetary obligation of the Company or any of its SubsidiariesSubsidiaries or their receipt of payment; provided, except with respect to officershowever, directors and consultants in that the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waivesettlement, release, assign, settle waiver or compromise of any claim, action Action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only claim brought by the payment of monetary damages not in excess of $1,000,000 or any obligation or liability stockholders of the Company in excess of such amount;
(xii) amend or waive any provision of against the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions Company and/or its directors relating to the Merger set forth in Article VI not being satisfiedtransactions contemplated by this Agreement shall be subject to Section 5.11 rather than this Section 5.1(b);
(xiv) shall not, and shall not permit any of its Subsidiaries to, adopt or enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (except for such entitytransactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries);
(xv) except (A) as contemplated by the Company’s capital expenditure budget set forth in Section 3.11(a)-1(ii) of the Company Disclosure Letter or (B) to the extent reasonably necessary to protect human health and safety or in response to casualty events, shall not, and shall not permit any of its Subsidiaries to, make any capital expenditure in excess of $5,000,000, individually, or $10,000,000, in the aggregate (for the Company and all of its Subsidiaries);
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
in the ordinary course of business consistent with past practices (xvii) if any), shall not, and shall not permit any of its Subsidiaries to, (A) make, change or revoke any material Tax election, (B) adopt or change any material method of reporting for Tax purposesaccounting or change any material Tax accounting period, (C) file any material amended Tax Return, (D) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim Action in respect of Taxes for a material refund of Taxes, in the case of each of (C) or (D) an amount materially in excess of $1,000,000;
the amount accrued or reserved with respect thereto on the financial statements of the Company and its Subsidiaries, (xviiiE) other than in the ordinary course of business consistent request any material ruling from any Governmental Entity with past practice, enter into any new, respect to Taxes or (F) materially amend or terminate, or knowingly fail to comply with the terms of, or otherwise materially alter take or knowingly fail to take any currentaction, agreement which failure to comply, action or obligations with failure to act would have a significant adverse effect on the continued validity and effectiveness of, any Affiliate material Tax Incentive that is in effect as of the Companydate hereof; orand
(xixxvii) agree to take shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, (iii) as may be contemplated or required by this Agreement, or (iv) as set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by the Company covenants and agrees with Parent with respect to clauses (A) that the business of the Company and (B) below (which consent its Subsidiaries shall be conducted in, and such entities shall not be unreasonably withheldtake any action except in, conditioned or delayed)the ordinary course of business consistent with past practice and, to the extent consistent therewith, the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) shall use commercially reasonable efforts to maintain and (i) preserve intact its their current business organization and advantageous (ii) preserve their relationships with customers, suppliers and others having business relationships and to retain the services of its key officers and key employeesdealings with them; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting Subject to the generality exceptions contained in clauses (i) through (iv) of Section 5.1(a), the foregoingCompany agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementParent, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries);
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another which remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(viii) purchaseexcept as required by Company Benefit Plans or Company Foreign Plans, sellshall not, transfer, mortgage, encumber and shall not permit any of its Subsidiaries to (A) (1) increase the compensation or otherwise dispose of any properties other benefits payable or assets having a value in excess of $1,000,000 in the aggregate provided to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions directors or dispositions pursuant to Contracts in effect as executive officers of the date of this Agreement or Company or, (2) except in the ordinary course of business consistent with past practicepractice or with respect to establishing cash compensation and benefits for any new hire, increase the compensation or other benefits payable or provided to employees who are not directors or executive officers of the Company, (B) enter into any employment, change of control, severance or retention agreement with any employee of the Company (except (1) for employment agreements terminable on less than 30 days’ notice without severance payment obligations or other penalty or (2) for severance agreements entered into with employees in the ordinary course of business consistent with past practice in connection with terminations of employment, provided no such agreement increases the amount that the Company or its Subsidiaries would be contractually obligated to pay to such employee absent such severance agreement), or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or 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, except as would not result in a material increase in cost to the Company;
(iv) shall not, and shall not permit any of its Subsidiaries to, change any of its financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws or similar applicable charter documents;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options and settlement of any Company Stock-Based Awards outstanding on the date hereof, and (B) the sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes;
(vii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(viii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offerotherwise), place except for any (A) indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or arrange among the Company’s wholly owned Subsidiaries, (B) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any issue existing indebtedness for borrowed money on materially no less favorable terms, (C) guarantees by the Company of debt securities, other than any indebtedness for borrowed money of Subsidiaries of the foregoing that Company, which indebtedness is incurred in compliance with this Section 5.1(b), (D) indebtedness for borrowed money incurred pursuant to working capital borrowings agreements in effect prior to the execution of this Agreement or letter the issuance of credit issuances under existing credit facilitiesnew commercial paper by the Company, in each case, case in the ordinary course of business consistent with past practice and would (E) indebtedness for borrowed money not reasonably be expected to delayexceed $5 million, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of plus any amounts needed by the Company Disclosure Schedule, make to consummate the transactions set forth on Schedule 5.1 in aggregate principal amount outstanding at any investment in excess time incurred by the Company or any of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, its Subsidiaries other than acquisitions pursuant to Contracts in effect as of the date of this Agreementaccordance with clauses (A)-(D), inclusive;
(ix) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material properties or assets, including any capital stock of Subsidiaries, except (A) pursuant to existing agreements in effect prior to the execution of this Agreement or (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated hereby, subject to the limitations of Section 5.6(b);
(x) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Material Contract in any material respect in a manner which is adverse to the Company;
(xi) shall not, and shall not permit any of its Subsidiaries to, enter into any Company Material Contracts other than in the ordinary course of business consistent with past practice, practice or enter into, renew, extend, amend or terminate (A) into any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amountcollective bargaining agreement;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidationto, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change file any method of reporting for material amended Tax purposesReturn, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make liability for Taxes or surrender any material claim for a material refund of Taxes, other than in the case of each of clauses (B) and (C) or hereof in respect of any Taxes that have been identified in the reserves for Taxes in the Company’s GAAP financial statements included in the Company’s SEC Documents, (D) change any accounting method, practice or policy in respect of a material amount of Taxes except as required by applicable Law, (E) prepare any Tax Returns in a manner which is not consistent in all material respects with the past practice of the Company and its Subsidiaries with respect to the treatment of items on such Tax Returns, or (F) incur any material liability for Taxes other than in the ordinary course of business (including as a result of the operation of the business in the ordinary course);
(xiii) shall not, and shall not permit any of its Subsidiaries to, make any capital expenditure or expenditures which (i) involves the purchase of material real property or (ii) is in excess of $1,000,000500,000 individually or $5 million in the aggregate, except for any such capital expenditures provided for in the Company’s 2007 Capital Expenditure Plan previously made available to Parent;
(xviiixiv) shall not, and shall not permit any of its Subsidiaries to, directly or indirectly acquire (i) by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other than manner, any person or division, business or equity interest of any person or (ii) except in the ordinary course of business consistent with past practice, enter into any newassets that, individually, have a purchase price in excess of $500,000 or, in the aggregate, have a purchase price in excess of $5 million;
(xv) shall not, and shall not permit any of its Subsidiaries to, make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or materially amend loan or otherwise materially alter advance (other than travel and similar advances to its employees in the ordinary course of business consistent with past practice) to, any currentperson, agreement other than a direct or indirect wholly owned Subsidiary of the Company in the ordinary course of business;
(xvi) shall not, and shall not permit any of its Subsidiaries to, pay, discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than, subject to Section 5.13, the payment, discharge, settlement or satisfaction in accordance with any Affiliate the terms of such material liabilities, claims or obligations reflected or reserved against in the most recent consolidated financial statements (or the notes thereto) of the Company; orCompany included in the Company SEC Documents or incurred since the date of such financial statements in the ordinary course of business consistent with past practice;
(xixxvii) agree shall not, and shall not permit any of its Subsidiaries to, settle or compromise any litigation, proceeding or investigation material to take the Company and its Subsidiaries taken as a whole (this covenant being in addition to the Company’s agreement set forth in Section 5.13 hereof); and
(xviii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries to take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to earlier of the Effective Time or and the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be expressly contemplated or required by this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Letter, the Company willshall, and will shall cause each of its Subsidiaries to to, (Ax) conduct its business in all material respects in the ordinary course consistent with past practice, and (By) use its commercially reasonable efforts to maintain and preserve intact in all material respects its business organization and advantageous business relationships and to retain the services of its key maintain existing relations and goodwill with Governmental Entities, customers, suppliers, creditors, lessors, officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoing, between From and after the date hereof and prior to earlier of the Effective TimeTime and the Termination Date, and except (iw) as may be required by applicable Law, (x) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (y) as may be expressly required or permitted by this Agreement or (z) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this AgreementLetter, the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly-owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid by Subsidiaries of the Company to the Company or to any of its wholly owned Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities issue or obligations convertible (whether currently convertible authorize or convertible only after propose the passage issuance, sale, pledge, encumbrance or delivery of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct securities in respect of, in lieu of or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any substitution for shares of its capital stock;
(iviii) issue any shares of capital stock except pursuant to as required by Company Benefit Plans (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments existence as of the date hereof), shall not, and shall not permit any of its Subsidiaries to (CA) increase the compensation or other benefits payable or provided to the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof's directors, and other than the issuance of shares by a wholly owned Subsidiary officers, employees, consultants or service providers, except for annual salary or wage increases for employees of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as executive officers of the date of this Agreement or Company) in the ordinary course of business consistent with past practice, including the timing thereof, not to exceed five percent per employee, (B) grant or pay (or commit to grant or pay or increase) any severance or termination pay of any current or former director, officer, employee, consultant or service provider, except for any such payments (x) to employees who are not officers of the Company or its Subsidiaries, (y) made in the ordinary course of business consistent with the terms of the Company’s and/or Subsidiary’s, as applicable, existing general severance policies and practices listed in item 16 of Section 3.9(a) of the Company Disclosure Letter and (z) made in exchange for a release of claims against the Company and its Subsidiaries; (C) enter into any employment, change of control, severance or retention agreement with any employee of the Company or any of its Subsidiaries, except (1) for severance agreements entered into with terminated employees that are consistent with clause (B) above or (2) for agreements with newly hired employees that are entered into in the ordinary course of business and are terminable on no more than 60 days' notice without penalty); (D) modify any Company Option, Company RSU or other equity-based award, (E) accelerate the payment or vesting of any payment, equity award or benefit provided or to be provided to any current or former director, officer, employee, consultant or other service provider or otherwise pay any amounts or provide any benefits not due such individual, (F) become a party to, establish, amend, commence participation in, terminate or commit itself to the adoption of any stock option plan or other stock-based compensation plan, compensation (except as permitted under clause (A) hereof), pension, retirement, profit-sharing, welfare benefit, or other employee benefit plan or agreement with or for the benefit of any current or former director, officer, employee, consultant or service provider, or any collective bargaining, works council or similar labor-related agreement; or (G) hire any new employee having a title of Vice President or above, appoint any new member to the Company’s Board of Directors, or terminate the employment of any employee having a title of Vice President or above, other than a termination for cause, or take any action that would result in such employee having the right to terminate for “Good Reason” pursuant to any agreement or arrangement with the Company;
(iv) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its present or former directors, employees, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, except as required by the terms of any Company Benefit Plan;
(v) shall not, and shall not permit any of its Subsidiaries to, change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP or SEC rule or policy;
(vi) incurexcept as required by applicable Law or the rules or requirements of any stock exchange, assumeshall not, guaranteeand shall not permit any of its Subsidiaries to adopt any amendments to its articles of incorporation or bylaws (or comparable organizational documents);
(vii) except for transactions among the Company and its Subsidiaries or among the Company's Subsidiaries, prepay shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or become obligated with respect encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interests in the Company or any Subsidiaries or any securities convertible into, exercisable for or exchangeable for any such shares or ownership interests or take any action to cause to be vested any indebtedness for borrowed money or offer, place or arrange any issue of debt securitiesotherwise unvested Company Equity Award (except as otherwise expressly provided by Section 2.3 hereof), other than (A) issuances of Shares in respect of any exercise of or settlement of Company Equity Awards outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b) and (B) the acquisition of Shares from a holder of a Company Equity Award in satisfaction of withholding obligations or in payment of the exercise price in accordance with the terms of the applicable Company Equity Award as of the date hereof;
(viii) except for transactions among the Company and its Subsidiaries or among the Company’s Subsidiaries, shall not, and shall not permit any of the foregoing that is pursuant its Subsidiaries to, directly or indirectly, purchase, repurchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to working acquire any such shares;
(ix) shall not, and shall not permit any of its Subsidiaries to, (A) make any loans, advances or capital borrowings contributions to or letter of credit issuances under existing credit facilities, investments in each case, any other Person except loans and advances made in the ordinary course of business consistent with past practice or among the Company and would its Subsidiaries or among the Company's Subsidiaries, (B) incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), other than (1) any indebtedness for borrowed money among the Company and its Subsidiaries or among the Company's Subsidiaries, and (2) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 5.1(b), or (3) other indebtedness for borrowed money not reasonably be expected to delay, adversely affect exceed $1 million in aggregate principal amount outstanding at any time incurred by the Company or impede Parent’s ability to obtain the Financingany of its Subsidiaries other than in accordance with clauses (1) and (2);
(viix) except as specifically contemplated for sales of goods in Section 5.1(bthe ordinary course of business, shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, pledge, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any portion of its properties or assets, including the Company Disclosure Schedulecapital stock of Subsidiaries, make any investment other than sales of obsolete equipment in excess the ordinary course and other ordinary course transactions with an aggregate value of less than $5,000,000 100,000 individually or $1 million in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viiixi) make shall not, and shall not permit any acquisition of another Person or business, whether by purchase of stock or securities or contributions its Subsidiaries to capital in excess of $5,000,000 in the aggregate, enter into (other than acquisitions pursuant with respect to Contracts in effect as of ordinary course customer contracts entered into after the date hereof), modify, amend, terminate or waive any rights under any Company Material Contract or any Contract entered into after the date hereof that would constitute a Company Material Contract if entered into prior to the date hereof (other than the expiration or renewal of this Agreementany Company Material Contract in accordance with its terms);
(ixxii) except in the ordinary course of business consistent with past practice, enter intoshall not, renew, extend, amend or terminate (A) and shall not permit any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereofits Subsidiaries to, (A) increase in make, change or revoke any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practicematerial Tax election, (B) pay file any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except amended Tax Return with respect to officers, directors and consultants in the ordinary course of business consistent with past practiceany material Tax, (C) accelerate the vesting of, or the lapsing make a material change in any method of forfeiture restrictions or conditions with respect to, any equity or equity-based awardsTax accounting, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claimmaterial Tax proceeding or consent to any extension or waiver of the limitation period applicable to any audit, action assessment or proceedingclaim for material Taxes, or (E) surrender any claim for a refund of material Taxes;
(xiii) shall not, and shall not permit any of its Subsidiaries to, settle, pay, discharge or satisfy any Action, other than waivers, releases, assignments, settlements or compromises any Action that involve involves only the payment of monetary damages not in excess of $1,000,000 100,000 individually or any obligation or liability of $1 million in the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfiedaggregate;
(xiv) enter into shall not, and shall not permit any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company or any of its Subsidiaries (other than the Merger);
(xv) shall not, and shall not permit any of its Subsidiaries to, incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith that, individually or in the aggregate, are in excess of $1,000,000, other than any capital expenditure (or series of related capital expenditures) consistent in all material respects with the Company’s annual capital expenditure budget for periods following the date of this Agreement, as provided to Parent;
(xvi) implement shall not, and shall not permit any of its Subsidiaries to, acquire (by merger, consolidation or adopt acquisition of stock or assets) any material change in its Tax or financial accounting principles, practices or methods, assets (other than as may be required by GAAP those used in the ordinary course of business), any other Person or applicable Lawany equity interest therein, in each case, with an aggregate value of more than $100,000 individually or $1 million in the aggregate;
(xvii) (Ashall not, and shall not permit any of its Subsidiaries to, take any action that would cause the Shares to no longer be a “covered security” as defined in Section 18(b)(1)(A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000Securities Act;
(xviii) other than in shall not, and shall not permit any of its Subsidiaries to, take any action to modify, amend, terminate or waive any rights under the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; orCapped Call Transactions;
(xix) agree shall not, and shall not permit any of its Subsidiaries to, take any action that would result in an anti-dilution event under the Convertible Notes; provided, that this clause (xix) shall not affect the Company's rights in connection with a Superior Proposal); and
(xx) shall not, and shall not permit any of its Subsidiaries to take authorize or make any commitment agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes of this Section 5.1 Between the date hereof and the definition earlier of Company Material Adverse Effectthe Effective Time and the Termination Date, Parent and Merger Sub shall not, and shall not permit any of their Subsidiaries or Affiliates to, enter into agreements with respect to, or consummate, any acquisitions, mergers, consolidations or business combinations that would reasonably be expected to prevent or materially delay, impede or interfere with its performance of, or the consent consummation of any Officer Shareholder will be deemed the consent of Parenttransactions contemplated by, this Agreement.
Appears in 1 contract
Samples: Merger Agreement (Interactive Intelligence Group, Inc.)
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.,
(biii) Without limiting the generality of the foregoingas may be required, between the date hereof and the Effective Time, except permitted or expressly contemplated by this Agreement or (iiv) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, the Company agrees with Parent that (iiA) as Parent may consent the business of the Company and its Subsidiaries shall be conducted in, and such entities shall not take any action except in, the ordinary course of business and (B) the Company shall use commercially reasonable efforts to direct the business of the Company Joint Ventures to be conducted in writing (which consentthe ordinary course of business; provided, however, that no action by the Company or its Subsidiaries or the Company Joint Ventures with respect to matters specifically addressed by any matter referred to in items provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision.
(v)b) The Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date of this Agreement and the Effective Time or the Termination Date, without the prior written consent of Parent (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, which consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter intoshall not, renewand shall not permit any of its Subsidiaries that is not wholly owned to, extendauthorize, amend declare or terminate pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (A) any Company Material Contract whether in cash, assets, stock or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors other securities of the Company or its Subsidiaries), except (A) dividends and distributions paid or made on a pro rata basis by Subsidiaries and (B) that the Company may continue to pay regular quarterly cash dividends, which are declared, announced and paid prior to the Closing Date, on the Company Common Stock consistent with past practice (not to exceed $0.13 per share per quarter);
(ii) shall not, and shall not permit any of its SubsidiariesSubsidiaries to, split, combine or reclassify any of its capital stock or other equity securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity securities, except for increases any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iii) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law (including Section 409A of the Code), shall not, and shall not permit any of its Subsidiaries to (A) except in base salary the ordinary course of business or as may be required by contract, increase the compensation or other benefits payable or provided to the Company’s present or former directors or officers, (B) except in the ordinary course of business, approve or enter into any employment, change of control, severance or retention agreement with any employee of the Company (except (1) to the extent necessary to attract a new employee to replace an agreement with a departing employee, (2) for employment agreements terminable on less than thirty (30) days’ notice without penalty or severance obligation or (3) for severance agreements entered into with employees (other than officers) in the ordinary course of business in connection with terminations of employment), or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into, amend, terminate or waive any rights with respect to any (x) collective bargaining agreement or (y) any plan, trust, fund, policy or arrangement for the benefit of any current or former directors or officers or any of their beneficiaries, except, in the case of clause (y) only, as would not, individually or in the aggregate, result in a material increase in cost to the Company;
(iv) shall not, and shall not permit any of its Subsidiaries to, change in any material respects any financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(v) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or bylaws or similar applicable charter documents;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date of this Agreement), other than (A) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options and settlement of any Company Stock-Based Awards in each case outstanding on the date of this Agreement or as set forth on Section 5.1(b)(vi) of the Company Disclosure Schedule, (B) issuances of shares of Company Common Stock in the ordinary course of business pursuant to the Company Benefits Plans, (C) the sale of shares of Company Common Stock pursuant to the exercise of options to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes, and (D) the grant of equity compensation awards in the ordinary course of business consistent with past practice, (Bpractice and as set forth in Section 5.1(b)(vi) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoingDisclosure Schedule;
(xivii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries and except in the ordinary course of business consistent with past practice, waiveshall not, releaseand shall not permit any of its Subsidiaries to, assigndirectly or indirectly, settle purchase, redeem or compromise otherwise acquire any claimshares of its capital stock or any rights, action warrants or proceedingoptions to acquire any such shares;
(viii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for, modify in any material respect the terms of, any indebtedness for borrowed money or become responsible for the obligations of any person (directly, contingently or otherwise), other than waiversin the ordinary course of business consistent with past practice and except for (A) any intercompany indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, releases(B) indebtedness for borrowed money incurred to replace, assignmentsrenew, settlements extend, refinance or compromises refund any existing indebtedness for borrowed money set forth on subsections 1(c), 2, 3, 4, 5 or 6 of Section 3.24 of the Company Disclosure Schedule without increasing the amount of such permitted borrowings or incurring breakage costs, provided that involve only any “road shows” or similar marketing efforts of the payment Company, or syndication by its financing sources, in connection with the replacement, renewal, extension or refinancing of monetary damages the existing indebtedness for borrowed money set forth on subsection 1(c) of Section 3.24 of the Company Disclosure Schedule shall not occur during the Marketing Period and during the period commencing five business days immediately prior to the Marketing Period, (C) guarantees by the Company of indebtedness for borrowed money of the Company, which indebtedness for borrowed money is incurred in compliance with this Section 5.1(b)(viii), (D) indebtedness for borrowed money incurred pursuant to the terms of agreements in effect prior to the execution of this Agreement, including amounts available but not borrowed as of the date of this Agreement, to the extent such agreements are set forth on Section 3.24 of the Company Disclosure Schedule and (E) indebtedness for borrowed money not to exceed $25 million in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with clauses (A)-(E), inclusive;
(ix) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall cause its Subsidiaries not to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets, license or otherwise, and including by way of formation of a Company Joint Venture) any material portion of its or its Subsidiaries’ material properties or assets, including the capital stock of Subsidiaries, other than in the ordinary course of business consistent with past practice and other than (A) pursuant to existing agreements in effect prior to the execution of this Agreement or (B) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated by this Agreement;
(x) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Material Contract, or any Contract that would be a Company Material Contract if in effect on the date of this Agreement, in any material respect in a manner which is adverse to the Company other than in the ordinary course of business;
(xi) shall not, and shall not permit any of its Subsidiaries to, enter into any Company Material Contracts other than in the ordinary course of business; and
(xii) shall not, and shall not permit any of its Subsidiaries to, acquire (whether by merger, consolidation or acquisition of stock or assets, license or otherwise) (A) any corporation, partnership or other business organization or division thereof or any assets, having a value in excess of $1,000,000 3 million individually or $10 million in the aggregate, other than purchases of inventory and other assets in the ordinary course of business or (B) any direct or indirect interest in any existing partnership, joint venture or restaurant from any other holder of an interest in any of the foregoing or any obligation or liability franchisee, other than in the case of this clause (B) such acquisitions as are disclosed in Section 5.1(xii) of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter DocumentsDisclosure Schedule;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of its Subsidiaries to, open or close, or commit to open or close, any restaurant locations or enter into any partnership or joint venture, or authorize or make any other capital expenditures, in each case other than in the conditions to the Merger set forth in Article VI not being satisfiedordinary course of business;
(xiv) enter into shall not, and shall not permit any “non-compete” of its Subsidiaries to, make any loans, advances or similar agreement that would materially restrict capital contributions to, or investments in, any person, in each case other than (A) in the businesses ordinary course of business, (B) pursuant to actions permitted by Section 5.1(xiii) or (C) loans, advances and capital contributions to, and investments in, the Company or a wholly owned Subsidiary of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective TimeCompany;
(xv) shall not, and shall not permit any of its Subsidiaries to, enter into, amend, waive or terminate (other than terminations in accordance with their terms) any Affiliate Transaction, other than continuing any Affiliate Transactions in existence on the date of this Agreement;
(xvi) shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Parent, make any material amendment in any Tax Return other than in the ordinary course of business or make or change any material Tax election except in the ordinary course of business;
(xvii) shall not, and shall not permit any of its Subsidiaries to, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entitythe Company, or any of its Subsidiaries (other than the Merger);
(xvixviii) implement shall not, and shall not permit any of its Subsidiaries to, write up, write down or adopt write off the book value of any assets that are, individually or in the aggregate, material change in to the Company and its Tax or financial accounting principlesSubsidiaries, practices or methodstaken as a whole, other than (A) in the ordinary course of business or (B) as may be required by GAAP or applicable Law;
(xviixix) shall not, and shall not permit any of its Subsidiaries to, pay, discharge, waive, settle or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practiceor (B) any claim, enter into liability or obligation not in excess of $3 million individually or $10 million in the aggregate;
(xx) shall not, and shall not permit any newof its Subsidiaries to, agree, in writing or otherwise, or materially amend or otherwise materially alter any currentannounce an intention, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing foregoing actions;
(xxi) shall not consent to or otherwise voluntarily agree to guarantee or become liable for any indebtedness for borrowed money in this Section 5.1(b) will preclude the fiduciaries excess of amounts outstanding as of the 401(k) Plan from purchasingdate of this Agreement of, or selling or otherwise disposing ofincrease its obligations to make capital contributions to, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.Kentucky Speedway; and
(cxxii) For purposes shall use commercially reasonable efforts to direct the business of the Company Joint Ventures to be conducted in compliance with the provisions of this Section 5.1 and as if the definition Company Joint Ventures were Subsidiaries of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of ParentCompany.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after During the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each of the Company, EHL, Parent and Amalgamation Sub shall, except to the Effective Time or extent that the dateother parties shall otherwise consent in writing, if any, carry on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (B) except where noncompliance would not have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations of such party when due, and, unless inconsistent with prudent business practices or as would not reasonably be expected to have a Material Adverse Effect on such party, use its commercially reasonable efforts consistent with past practices and policies to maintain and (i) preserve substantially intact its present business organization and advantageous business relationships and to retain organization, (ii) keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement or by Law, without the prior written consent of Parent and adversely affect EHL, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company, EHL, Parent and Amalgamation Sub shall not do any of the Parties following or cause any of the following to obtain occur:
(a) Waive any necessary approvals stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any regulatory agency employee, consultant, director or other Governmental Entity required stock plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting the generality of the foregoingGrant any severance or termination pay to any officer or employee except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the Effective Timeother party, except or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(ic) as set forth in Section 5.1(b) Transfer or license to any person or otherwise extend, amend or modify any material rights to any Intellectual Property of the Company Disclosure Scheduleor Parent, (ii) as Parent may consent in writing (which consentapplicable, with respect or enter into grants to transfer or license to any matter referred to person future patent rights, other than in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (the ordinary course of business consistent with respect to past practices provided that in no event shall the Company or Parent license on an exclusive basis or sell any Intellectual Property of the foregoing enumerated items) belowCompany, shall not be unreasonably withheld, conditioned or delayed) or (iii) Parent as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:applicable;
(id) adjustDeclare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock;
(iie) makePurchase, declare redeem or pay any dividendotherwise acquire, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of its capital stock of the Company and Parent, as applicable, other than repurchases of unvested shares at cost in connection with the termination of the relationship with any employee or consultant pursuant to agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for shares of capital stock, or subscriptions, rights, warrants or options to acquire any shares of its capital stock or any securities convertible into or exchangeable for shares of capital stock, except (A) for dividends paid by or enter into other agreements or commitments of any direct character obligating it to issue any such shares or indirect wholly owned Subsidiary to the Company convertible or to any exchangeable securities, other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) than in connection with the cashless exercises pursuant to the exercise or conversion of stock options issued and any convertible or exchangeable securities outstanding as of the date hereof under the Company Stock Planshereof;
(iiig) grant Amend its Charter Documents, except that the Company shall be entitled to amend such Charter Documents solely to remove or waive any Person liquidation preference that would be triggered by the consummation of the Acquisition and the Share Transfer;
(h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any right equity interest in or a portion of the assets 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 shares assets which are material, individually or in the aggregate, to the business of its capital stockParent or the Company as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict such party’s ability to compete or to offer or sell any products or services;
(ivi) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock OptionsSell, (B) the vesting of Company RSUs or Company Performance Shareslease, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgagelicense, encumber or otherwise dispose of any properties or assets having a value in excess assets, except (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except inventory in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or and (B) any Contracts the sale, lease or disposition (other than through licensing) of property or assets that are not material, individually or in the aggregate, to the business of such party;
(j) Except for borrowing under the Company’s existing credit facilities in the ordinary coursecourse of business, involving the commitment or transfer of value incur any indebtedness for borrowed money in excess of $1,000,000 25,000 in the aggregate in or guarantee any yearsuch indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Parent or the Company, as applicable, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing;
(xk) except Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable “at will”), pay any special bonus or special remuneration to the extent required by Law any director or any Company Benefit Plan in effect employee other than pursuant to obligations existing as of the date hereof, or increase the salaries or wage rates or fringe benefits (Aincluding rights to severance or indemnification) increase of its directors, officers, employees or consultants, except in the ordinary course of business consistent with past practices other than pursuant to obligations existing as of the date hereof;
(l) Pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practices or in accordance with their terms, or liabilities recognized or disclosed in the Unaudited Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred in the ordinary course of business since the date of such financial statements, or waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is a party or of which Parent is a beneficiary, as applicable, which failure would reasonably likely be expected to have a Material Adverse Effect on the Company or Parent, as applicable, except that EHL and the Company may provide for the payment of all reasonable fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby incurred by EHL and the Company to be paid by either of EHL or the Company upon or prior to the consummation of the Acquisition;
(m) Except in the ordinary course of business consistent with past practices, modify, amend or terminate any Material Company Contract or Parent Contract, as applicable, or waive, delay the exercise of, release or assign any material rights or claims thereunder;
(n) Except as required by US GAAP or Singapore GAAP, revalue any of its assets or make any change in accounting methods, principles or practices;
(o) Except in the ordinary course of business consistent with past practices, incur or enter into any agreement, contract or commitment requiring such party to pay in excess of $100,000 in any 12 month period;
(p) Engage in any action that would reasonably be expected to cause the Acquisition or Share Transfer to fail to qualify as a “reorganization” under Section 368(a) of the Code;
(q) Settle any litigation to which an Insider is a party or where the consideration given by the Company is other than monetary;
(r) Make or rescind any Tax elections that, individually or in the aggregate, would be reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any material income tax liability or, except as required by applicable law, materially change any method of accounting for Tax purposes or prepare or file any Return in a manner the compensation inconsistent with past practice;
(s) Form, establish or benefits acquire any subsidiary except as contemplated by this Agreement;
(t) Make capital expenditures in excess of $300,000, except in accordance with prudent business and operational practices consistent with prior practice;
(u) Enter into any employees, transaction with or distribute or advance any assets or property to any of its officers, directors, consultants partners, stockholders or independent contractors other affiliates other than the payment of the Company or any of its Subsidiaries, except for increases in base salary and benefits in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xixv) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1 (a) will preclude the fiduciaries of the 401(kthrough (u) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Ascend Acquisition Corp.)
Conduct of Business by the Company and Parent. (a) From and after During the period from the date hereof of this Agreement and prior continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each of the Company, Parent and Merger Sub shall, except to the Effective Time or extent that the dateother party shall otherwise consent in writing, if any, carry on which this Agreement is earlier terminated pursuant to Section 7.1, and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b), (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in the usual, regular and ordinary course consistent with past practicepractices, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (B) except where noncompliance would not have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to maintain and (i) preserve substantially intact its present business organization and advantageous business relationships and to retain organization, (ii) keep available the services of its key present officers and key employeesemployees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and (C) take no action others with which would materially it has significant business dealings. In addition, except as required or permitted by the terms of this Agreement or set forth in Schedule 4.1 hereto, without the prior written consent of the other party, during the period from the date of this Agreement and adversely affect continuing until the earlier of the termination of this Agreement pursuant to its terms or delay the ability Closing, each of the Company, Parent and Merger Sub shall not do any of the Parties to obtain following:
(a) Waive any necessary approvals stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any regulatory agency employee, consultant, director or other Governmental Entity required stock plans or authorize cash payments in exchange for the Transactions or otherwise materially delay or prohibit the Transactions.any options granted under any of such plans;
(b) Without limiting the generality of the foregoingGrant any severance or termination pay to any officer or employee except pursuant to applicable law, between written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the Effective Timeother party, except or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof;
(ic) as set forth in Section 5.1(b) Transfer or license to any person or otherwise extend, amend or modify any material rights to any Intellectual Property of the Company Disclosure Scheduleor Parent, (ii) as Parent may consent in writing (which consentapplicable, with respect or enter into grants to transfer or license to any matter referred to person future patent rights, other than in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (the ordinary course of business consistent with respect to past practices provided that in no event shall the Company or Parent license on an exclusive basis or sell any Intellectual Property of the foregoing enumerated items) belowCompany, shall not be unreasonably withheld, conditioned or delayed) or (iii) Parent as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:applicable;
(id) adjustDeclare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or otherwise amend issue or authorize the terms issuance of its any other securities in respect of, in lieu of or in substitution for any capital stock;
(iie) makePurchase, declare redeem or pay any dividendotherwise acquire, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumberindirectly, any shares of its capital stock of the Company and Parent, as applicable, including repurchases of unvested shares at cost in connection with the termination of the relationship with any employee or consultant pursuant to agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company subscriptions, rights, warrants or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock or any securities convertible into or exchangeable for shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible or exchangeable securities;
(ivg) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned SubsidiaryAmend its Charter Documents;
(vh) purchaseAcquire or agree to acquire by merging or consolidating with, sellor by purchasing any equity interest in or a portion of the assets of, transferor by any other manner, mortgageany business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of Parent or the Company as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory or otherwise restrict such party’s ability to compete or to offer or sell any products or services;
(i) Sell, lease, license, encumber or otherwise dispose of any properties or assets having a value in excess assets, except (A) sales of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except inventory in the ordinary course of business consistent with past practice, and (B) the sale, lease or disposition (other than through licensing) of property or assets that are not material, individually or in the aggregate, to the business of such party;
(j) Incur any indebtedness for borrowed money in excess of $25,000 in the aggregate or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Parent or the Company, as applicable, enter intointo any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing;
(k) Adopt or amend any employee benefit plan, renewpolicy or arrangement, extendany employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable “at will”), pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants, except in the ordinary course of business consistent with past practices;
(l) Pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practices or in accordance with their terms, or liabilities recognized or disclosed in the Unaudited Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date of this Agreement, as applicable, or incurred since the date of such financial statements, or waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is a party or of which Parent is a beneficiary, as applicable;
(m) Except in the ordinary course of business consistent with past practices, modify, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to Parent Contract, as applicable, or waive, delay the date hereof would be a Company Material Contract exercise of, release or assign any material rights or claims thereunder;
(Bn) Except as required by U.S. GAAP, revalue any Contracts not of its assets or make any change in accounting methods, principles or practices;
(o) Except in the ordinary coursecourse of business consistent with past practices, involving the incur or enter into any agreement, contract or commitment or transfer of value requiring such party to pay in excess of $1,000,000 in the aggregate 50,000 in any year12 month period;
(xp) Engage in any action that could reasonably be expected to cause the Merger to fail to qualify as a “reorganization” under Section 368(a) of the Code;
(q) Settle any litigation to which an Insider is a party or where the consideration given by the Company is other than monetary;
(r) Make or rescind any Tax elections that, individually or in the aggregate, could be reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any material income tax liability or, except to the extent as required by Law applicable law, materially change any method of accounting for Tax purposes or prepare or file any Company Benefit Return in a manner inconsistent with past practice;
(s) Form, establish or acquire any subsidiary, except as contemplated by this Agreement;
(t) Permit any Person to exercise any of its discretionary rights under any Plan in effect as of to provide for the date hereof, (A) increase in any manner the compensation or benefits automatic acceleration of any employeesoutstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans;
(u) Make capital expenditures except in accordance with prudent business and operational practices consistent with prior practice;
(v) Make or omit to take any action which would be reasonably anticipated to have a Material Adverse Effect;
(w) Enter into any transaction with or distribute or advance any assets or property to any of its officers, directors, consultants partners, stockholders or independent contractors other affiliates other than the payment of the Company or any of its Subsidiaries, except for increases in base salary and benefits in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviii) other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xixx) agree to take Agree in writing or make any commitment otherwise agree, commit or resolve to take any of the actions prohibited by this described in Section 5.1(b); provided, that nothing in this Section 5.1(b4.1 (a) will preclude the fiduciaries of the 401(kthrough (w) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planabove.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law Law, any Governmental Entity of competent jurisdiction or as expressly required by this Agreement the rules or as permitted by Section 5.1(b)regulations of the New York Stock Exchange, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as may be contemplated or required by this Agreement, including the adoption of the Rights Plan in accordance with Section 5.15, (iv) in connection with the transaction identified in Item 7 of Section 5.1 of the Company Disclosure Schedule, or (v) as otherwise set forth in Section 5.1 of the Company Disclosure Schedule, the Company willcovenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and will cause each of its Subsidiaries to (A) conduct its business in all material respects in such entities shall not take any action except in, the ordinary course consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsbusiness.
(b) Without limiting Subject to the generality exceptions contained in clauses (i) through (v) of Section 5.1(a) and subject to Section 5.1 of the foregoingCompany Disclosure Schedule, the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toCompany:
(i) adjustshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, declare, set aside, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries);
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or otherwise amend issue or authorize or propose the terms issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned Subsidiary of the Company which remains a wholly owned Subsidiary after consummation of such transaction;
(iiiii) makeshall not, declare and shall not permit any of its Subsidiaries to hire or pay terminate any dividenddirector or executive officer of the Company or any of its Subsidiaries (other than in the ordinary course of business and any terminations for cause or, for the avoidance of doubt, any transfers to or among the Company or any of its Subsidiaries);
(iv) except as required by existing written agreements, the Company Benefit Plans or the Company Foreign Plans, or make as otherwise required by applicable Law (including Section 409A of the Code), shall not, and shall not permit any of its Subsidiaries to (A) except in the ordinary course of business or as may be required by contract, increase or agree to increase the compensation or other distribution onbenefits payable or provided to the Company’s directors, or directly officers (B) enter into any employment, change of control, severance or indirectly redeemretention agreement with any employee of the Company (except (1) to the extent necessary to replace an agreement with a departing employee on substantially similar terms to the agreement being replaced, purchase or otherwise acquire (2) for employment agreements entered into in the ordinary course of business (3) for severance agreements entered into with non-officer employees in the ordinary course of business in connection with terminations of employment which do not impose obligations on the Company or its Subsidiaries), or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or 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, except as would not result in a material increase in cost to the Company;
(v) shall not, and shall not permit any of its Subsidiaries to, change financial accounting methods, policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vi) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any of its Subsidiaries or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) 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 its capital stock, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) for dividends paid by issuances of shares of Company Common Stock in respect of any direct exercise of Company Stock Options and settlement of any Company Stock-Based Awards (each as hereinafter defined) outstanding on the date hereof or indirect wholly owned Subsidiary to as may be granted after the Company or to any other direct or indirect wholly owned Subsidiarydate hereof as permitted under this Section 5.1(b), and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises sale of Shares pursuant to the exercise of stock options issued and outstanding as to purchase Company Common Stock if necessary to effectuate an optionee direction upon exercise or for withholding of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock OptionsTaxes, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred grant of equity compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, awards in the ordinary course of business consistent with past practice in accordance with the Company’s customary schedule up to a maximum of Thirty-Three Million Dollars ($33,000,000) in equity compensation awards per annum and would not reasonably be expected to delay, adversely affect (D) the acquisition of Shares from a holder of Company Stock Option or impede Parent’s ability to obtain Company Stock-Based Award in satisfaction of Tax withholding obligations or in payment of the Financingexercise price;
(vii) except as specifically contemplated in Section 5.1(b) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation or by-laws or similar applicable organizational documents other than immaterial amendments to applicable organizational documents of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether Company’s Subsidiaries or as required by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Personapplicable Law;
(viii) make any acquisition of another Person except for transactions among the Company and its wholly owned Subsidiaries or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in among the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) Company’s wholly owned Subsidiaries and except in the ordinary course of business consistent with past practice, enter intoshall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(ix) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) indebtedness for borrowed money incurred to replace, renew, extend, amend refinance or terminate refund any existing indebtedness for borrowed money on customary commercial terms that are not materially less favorable in the aggregate than the current terms of such indebtedness (Aincluding in respect of prepayment penalties), other than the issuance of new or replacement public bonds, notes or similar instruments, (C) any guarantees by the Company Material Contract or Contract of indebtedness for borrowed money of Subsidiaries of the Company, which if entered into indebtedness is incurred in compliance with this Section 5.1(b), (D) indebtedness for borrowed money incurred pursuant to agreements in effect prior to the date hereof would be a Company Material Contract execution of this Agreement, including the Company’s existing credit facility, but excluding the issuance of new commercial paper, bonds, notes or similar instruments by the Company; and (BE) any Contracts not the issuance of letters of credit in the ordinary course, involving the commitment or transfer course of value in excess of $1,000,000 in the aggregate in any yearbusiness;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any of its properties or assets, including the capital stock of Subsidiaries, except for increases other than in base salary transactions in the ordinary course of business consistent with past practice, or involving less than One Hundred Million Dollars (B$100,000,000) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if aggregate and except pursuant to existing agreements in effect on prior to the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment execution of this Agreement that have been disclosed to do any of the foregoingParent;
(xi) except in the ordinary course of business consistent with past practiceshall not, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages and shall not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
to: (xvA) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization (other than this Agreement), or (B) acquire by merging or consolidating with, or by purchasing an equity interest in or portion of such entity;
(xvi) implement the assets of, or adopt by any material change other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, or acquire any capital stock or assets of any person, in its Tax or financial accounting principles, practices or methodseach case, other than as may be required by GAAP or applicable Law;
(xviix) in transactions involving less than Fifty Million Dollars (A$50,000,000) make, change or revoke any material Tax electionin the aggregate, (By) change any method pursuant to existing agreements in effect prior to the execution of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, this Agreement that have been disclosed to Parent or (Dz) make transactions among the Company and its wholly owned Subsidiaries or surrender any claim for a material refund of Taxesamong the Company’s wholly owned Subsidiaries, in the case of each clause (z), to the extent such transactions do not give rise to costs or other adverse consequences to the Company, Parent or their respective Subsidiaries or affiliates that are material (it being understood and agreed that nothing in this Section 5.1 shall prohibit the Company from forming new Subsidiaries in the ordinary course of (C) or (D) in excess of $1,000,000business);
(xviiixii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not purchase or acquire or lease (as tenant/subtenant) any properties or assets of a third party, other than in transactions in the ordinary course of business consistent with past practice and at fair market value or involving less than Seventy Five Million Dollars ($75,000,000) in the aggregate and except pursuant to existing agreements in effect prior to the execution of this Agreement;
(xiii) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any material rights under any Company Material Contract in a manner which is adverse to the Company other than in the ordinary course of business consistent with past practice;
(xiv) shall not, and shall not permit any of its Subsidiaries to, enter into any newCompany Material Contracts other than in the ordinary course of business consistent with past practice (including in connection with the expiration or renewal of any such Company Material Contracts);
(xv) shall not, and shall not permit any of its Subsidiaries to, (A) make or change any material Tax election other than in the ordinary course of business (provided that it is agreed and understood that an entity classification election pursuant to Treasury Regulation Section 301.7701-3, other than an initial classification election, shall be treated as not being made in the ordinary course of business), (B) file any material amended Tax Return, settle or compromise any material Tax audit or other proceeding for an amount materially in excess of the amount accrued or reserved therefor in the Company’s financial statements included in the Company SEC Documents, (C) compromise or surrender any material Tax refund or credit other than in the ordinary course of business or (D) change any material method of Tax accounting other than in the ordinary course of business, in each case of clauses (A) through (D) other than as required by Law;
(xvi) shall not, and shall not permit any of its Subsidiaries to, except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned subsidiaries, make any loans, advances or capital contributions to, or materially amend or otherwise materially alter investments in, any current, agreement or other Person in an aggregate principal amount greater than Fifty Million Dollars ($50,000,000) other than pursuant to existing contractual obligations with any Affiliate as of the Company; ordate of this Agreement;
(xixxvii) agree shall not, and shall not permit any of its Subsidiaries to, make, commit to take make or make authorize any commitment capital expenditure or research and development expenditure, other than (A) capital expenditures associated with reimbursable commercial contracts where substantially all of the cost of such expenditures is billable to the customer and (B) capital expenditures and research and development expenditures in an aggregate amount not to exceed Two Hundred Million Dollars ($200,000,000) per annum; and
(xviii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries and affiliates, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company Material Adverse Effectits Subsidiaries or affiliates to: (i) enter into or consummate any agreements or arrangements for an acquisition (via stock purchase, the consent merger, consolidation, purchase of assets or otherwise) of any Officer Shareholder will be deemed ownership interest or assets of any person; or (ii) take or agree to take any other action (including entering into agreements with respect to any equity investments, joint ventures, acquisitions, mergers, consolidations or business combinations), which in the consent case of clause (i) or (ii), in Parent’s reasonable opinion, would result in the failure to obtain any approvals of any Governmental Entity required in connection with the transactions contemplated hereby, including any Company Approval or any Parent Approval.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise may be consented to in writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed), (iii) as may be required by this Agreement, the Loss Portfolio Binder or Loss Portfolio Contract, (iv) for actions taken or not taken as were reasonably necessary (A) to protect the health and safety of the Company’s or its Subsidiaries’ employees, customers or suppliers and other individuals having business dealings with the Company will, and will cause each or any of its Subsidiaries or (B) to respond to service disruptions caused by COVID-19 or any COVID-19 Measures in response to COVID-19, in each case of clause (A) and (B), subject to reasonable prior consultation with Parent to the extent reasonably practicable or (v) as set forth in Section 5.1(a) of the Company Disclosure Schedules, the Company covenants and agrees with Parent that it shall conduct the business of the Company and its business Subsidiaries in all material respects in the ordinary course of business, and, to the extent consistent with past practicetherewith, (B) shall use commercially and cause each of its Subsidiaries to use its reasonable best efforts to maintain its and preserve intact its business organization Subsidiaries’ respective relations and advantageous business relationships and to retain the services of its key officers and key goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees, agents and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsbusiness associates.
(b) Without limiting the generality of the foregoing, the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) without the prior written consent of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, consent shall not be unreasonably withheld, conditioned delayed or delayed) or (iii) as otherwise expressly contemplated by this Agreementconditioned), the Company will and will cause each of its Subsidiaries not toSubsidiaries:
(i) adjustshall not authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or any of its Subsidiaries) (other than dividends or distributions by wholly-owned Subsidiaries to the Company or between wholly-owned Subsidiaries);
(ii) shall not split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid any such transaction by any direct or indirect wholly a wholly-owned Subsidiary to of the Company or to any other direct or indirect wholly which remains a wholly-owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise Subsidiary after consummation of stock options issued and outstanding as of the date hereof under the Company Stock Planssuch transaction;
(iii) grant except as required by any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to Company Benefit Plan, or as otherwise required by applicable Law, shall not (A) except with respect to increases in base salary in the exercise ordinary course of Company Stock Optionsbusiness, increase the compensation or other benefits payable or provided to the Company’s directors, executive officers, employees or independent contractors, (B) hire or retain the vesting of Company RSUs services of, or Company Performance Sharesoffer to hire or retain the services of, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance any individual to be an employee or independent contractor with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company an annual base salary or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value fees in excess of $1,000,000 150,000, (C) terminate the employment or services of any employee or independent contractor who is a natural person with an annual base salary or fees in the aggregate to any Person excess of $150,000 (other than to a wholly owned Subsidiaryexcept for cause), other than encumbrances(D) enter into any employment, acquisitions change of control, severance or dispositions pursuant to Contracts retention agreement (which agreement shall for this purpose include becoming a participant in any change of control, severance or retention plan) with any individual (except for employment agreements terminable without notice or penalty), or (E) establish, adopt, enter into, terminate, amend or provide discretionary benefits under any Company Benefit Plan or any arrangement that would have been a Company Benefit Plan had it been in effect as of the date of this Agreement (except as otherwise permitted pursuant to clause (D) of this Section 5.1(b)(iii));
(iv) shall not materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by concurrent changes in the ordinary course GAAP, SAP, applicable Law or guidelines or policies of business consistent with past practiceany Governmental Entity;
(v) shall not adopt any amendments to its certificate of incorporation or bylaws or similar applicable charter documents;
(vi) incurexcept for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, assumeshall not purchase, guaranteeredeem, prepay acquire, issue, sell, pledge, dispose of or become obligated encumber, or authorize the purchase, redemption, acquisition, issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 indebtedness for borrowed money such shares of capital stock, ownership interest or offer, place convertible or arrange any issue of debt exchangeable securities, other than (A) issuances of shares of Common Stock in respect of any settlement of any Company Equity Awards outstanding on the foregoing that is date hereof and disclosed pursuant to working Section 3.2(c) or as may be granted after the date hereof to the extent permitted under this Section 5.1(b)(vi), (B) the acquisition of shares of Common Stock from a holder of a Company Equity Award in satisfaction of withholding obligations or due to the forfeiture of a Company Equity Award pursuant to the terms of such Company Equity Award and (C) the pledging or encumbrance of any shares of capital borrowings stock or letter other ownership interest in the Subsidiaries or any securities convertible into or exchangeable for such shares or ownership interests, or any other rights, warrants or options to acquire or with respect to any such shares of credit issuances under existing credit facilitiescapital stock, ownership interest or convertible or exchangeable securities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected case to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors secure indebtedness of the Company or any of its SubsidiariesSubsidiaries in existence on the date hereof or not prohibited by clause (x) below;
(vii) shall not incur, except assume, guarantee, or otherwise become liable for, or repay or prepay any indebtedness for increases in base salary borrowed money (including capitalized lease obligations and/or purchase money indebtedness), other than (A) indebtedness incurred under the Existing Credit Agreement in the ordinary course of business consistent with past practicebusiness, subject to Section 6.3(e), (B) pay any severance indebtedness among the Company and its wholly-owned Subsidiaries or retirement benefits to among the Company’s wholly-owned Subsidiaries, and (C) guarantees by the Company or any employees, directors, consultants or independent contractors of its Subsidiaries of indebtedness of the Company or any of its wholly-owned Subsidiaries which is (1) in existence on the date hereof or (2) incurred in compliance with this Section 5.1(b)(vii);
(viii) except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber, or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets, including the capital stock of Subsidiaries, except with respect (A) pursuant to officersexisting agreements in effect prior to the execution of this Agreement and that have been disclosed pursuant to Section 3.20, directors or (B) investment portfolio transactions in the ordinary course of business;
(ix) except for transactions among the Company and consultants its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not sell, license, transfer, mortgage or otherwise encumber any of material Owned Intellectual Property, except for non-exclusive licenses granted in the ordinary course of business;
(x) shall not authorize any material capital expenditures except as expressly provided for in the Company’s capital expenditure budget set forth on Section 5.1(b)(ix) of the Company Disclosure Schedules;
(xi) shall not (A) enter into any Contract that would have been a Company Material Contract if in force on the date of this Agreement other than in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (FB) enter intomodify, amend, alter, adopt, implement terminate or otherwise make waive any commitment rights under any Company Material Contract in any material respect in a manner which is or would reasonably be expected to do any of be adverse to the foregoingCompany;
(xixii) except shall not 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 (A) with respect to the Company’s claims activity in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises (B) that involve only the payment of monetary money damages by the Company or any of its Subsidiaries (I) not in excess of $1,000,000 individually or any obligation in the aggregate or liability of (II) consistent with the Company reserves reflected in excess of such amount;
(xii) amend or waive any provision of the Charter DocumentsCompany’s balance sheet at September 30, 2020;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI shall not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization reorganization, or convert or otherwise change its form of such legal entity;
(xvixiv) implement shall not (A) prepare or adopt file any material change in its Tax or financial accounting principlesReturn inconsistent with past practice, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (AB) make, change or revoke any material Tax election, (BC) file any amended Tax Return with respect to any material Tax, (D) make a material change in any method of reporting for Tax purposesaccounting, (CE) settle or compromise any material Tax claimproceeding, audit (F) enter into any closing agreement or disputevoluntary disclosure agreement with any Governmental Authority relating to Taxes, (G) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability or (DH) make or surrender request any claim for a material refund of ruling with respect to Taxes, in the case of each of (C) or (D) in excess of $1,000,000;
(xviiixv) shall not amend, modify or terminate any Reinsurance Contract in such a way as to materially reduce the expected business or economic benefits thereof, or, other than in the ordinary course of business consistent with past practicebusiness, enter into any newContract that would constitute a Reinsurance Contract if in effect as of the date hereof, other than the Loss Portfolio Contract;
(xvi) shall not enter into any material Contract or material commitment with any Insurance Regulator;
(xvii) shall not change in any material respect any material products or any material operating or enterprise risk management policies, in each case, except (i) as required by Law or by policies imposed by a Governmental Entity and (ii) for ordinary course modifications to product coverage;
(xviii) shall not enter into any new lines of business or withdraw from, or materially amend or otherwise materially alter put into “run off”, any current, agreement or obligations with any Affiliate existing material lines of the Company; orbusiness;
(xix) agree to take or shall not make any commitment filing with any Governmental Entity relating to (1) the withdrawal or surrender of any material Company Permit held by the Company or any of its Subsidiaries or (2) the withdrawal by any of the Companies or its Subsidiaries from any lines of business;
(xx) shall not seek approval from the applicable Governmental Entity for the use of any accounting practices in connection with the SAP Statements that depart from the accounting practices prescribed or permitted by applicable insurance Laws of the applicable domiciliary jurisdiction;
(xxi) shall not reduce or strengthen any reserves, provisions for losses, or other liability amounts in respect of Insurance Contracts or Reinsurance Contracts, except in the ordinary course of business or as may be required by SAP or GAAP, or as required by Law or by policies imposed by a Governmental Entity;
(xxii) shall not materially alter or materially amend any existing (1) insurance or reinsurance underwriting, reserving, claims handling, loss control, policy retention or conservation, except as required by Law or by policies imposed by a Governmental Entity, (2) business lines and (3) actuarial practice guidelines or policies of the Company or the Insurance Subsidiaries or any material assumption underlying any reserves or actuarial practice or policy, except as may be required under GAAP or SAP or as required by Law or by policies imposed by a Governmental Entity; and
(xxiii) shall not agree, in writing or otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Between the date hereof and the Effective Time, Parent and Merger Sub shall not, and shall not permit any of their Subsidiaries or controlled Affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect.
(d) Notwithstanding anything in this Section 5.1 and to the definition contrary, none of the actions contemplated in Section 5.14(a) shall require the Company Material Adverse Effect, the to seek any consent of any Officer Shareholder will be deemed the consent of from Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof January 26, 2007 and prior to the Effective Time date on which a majority of the Company’s directors are designees of Parent or Merger Sub or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent, with the prior written consent of Parent, (iii) as expressly contemplated, required or permitted by this Agreement or (iv) as set forth in Section 5.1(a) 5.1 of the Company Disclosure Schedule, or (iii) as otherwise consented to by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned or delayed)Letter, the Company will, shall and will shall cause each of its Subsidiaries to (Ax) conduct its business in all material respects in the ordinary course consistent with past practice, practice and (By) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employees; provided, and (C) take however, that no action which by the Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would materially and adversely affect or delay the ability constitute a breach of any of the Parties to obtain any necessary approvals of any regulatory agency or such other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsprovision.
(b) Without limiting the generality of the foregoing, between Between the date hereof and the Effective Timedate on which a majority of the Company’s directors are designees of Parent or Merger Sub, except (i) as set forth in Section 5.1(b) 5.1 of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned Letter or delayed) or (iii) as otherwise expressly contemplated or expressly permitted by this Agreement, without the Company will and will cause each prior written consent of its Subsidiaries not toParent, the Company:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) shall not make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises or similar transactions pursuant to the exercise of stock options or other awards issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right Plans or permitted hereunder to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, be granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of after the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of ; provided that the Company may continue to pay regular quarterly cash dividends on the Shares consistent with past practice (not to exceed $0.05 per share per quarter) and this Section 5.1(b)(i) shall not apply to dividends or distributions paid in cash by Subsidiaries to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or Subsidiaries in the ordinary course of business consistent with past practice;
(ii) shall not, and shall not permit any of its Subsidiaries to, adjust, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, 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) shall not, and shall not permit any of its Subsidiaries to, make any material change (or file any such change) in any method of Tax accounting or make any material change in any Tax election (except, in each case, as in the ordinary course of business or as is consistent with past practice); settle or compromise any material Tax liability for an amount materially in excess of the amount reserved therefor on the financial statements included in the Company SEC Documents, or enter into any closing agreement relating to Taxes for an amount materially in excess of the amount reserved therefor on the financial statements included in the Company SEC Documents;
(iv) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law, shall not, and shall not permit any of its Subsidiaries to (A) increase the compensation or other benefits payable or provided to the Company’s directors or executive officers except for increases to executive officers in the ordinary course of business consistent with past practice that become effective no earlier than July 1, 2007 and only in the event the Effective Time does not occur prior to such date, (B) enter into any employment, change in control, severance or retention agreement with any employee of the Company or (C) establish, adopt, enter into or amend any collective bargaining agreement, or Company Benefit Plan, except to the extent required to comply with Section 409A of the Code or as may be immaterial;
(v) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans to any of its officers, directors, employees, agents or consultants (other than loans or advances in the ordinary course of business consistent with past practice, including without limitation stock loans made under the Company’s Stock/Loan Plan to the extent approved for fiscal 2007 on June 26, 2006 by the Compensation Committee and the Board of Directors) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons, except as required by the terms of any Company Benefit Plan;
(vi) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(vii) shall not, and shall not permit any of its material Subsidiaries to, amend or waive any provision of its certificate of incorporation or by-laws or similar applicable charter documents or in the case of the Company, enter into any agreement with any of its stockholders in their capacity as such;
(viii) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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 or take any action to cause to be exercisable any otherwise unexercisable Company Stock Option under any existing Company Stock Option Plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of Shares in respect of any exercise of Company Stock Options and settlement of any Performance Shares outstanding on the date hereof or as may be granted after the date hereof as permitted under this Section 5.1(b), (B) the grant of equity compensation awards in the ordinary course of business consistent with past practice under the Company’s 2004 Amended and Restated Equity Incentive Compensation Plan in accordance with the Long-Term Incentive Compensation Program and Regular Stock/Loan and Restricted Stock Grant Program approved for fiscal 2007 on June 26, 2006 by the Compensation Committee and the Board of Directors, and (C) the acquisition of Shares from a holder of a Company Stock Option, Restricted Shares or Performance Shares in satisfaction of withholding obligations or in payment of the exercise price;
(ix) except for transactions in the ordinary course of business consistent with past practice, among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its material Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(x) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become obligated with respect to liable for any indebtedness for borrowed money (directly, contingently or offer, place or arrange any issue of debt securitiesotherwise), other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would except for (A) any indebtedness for borrowed money among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries and (B) indebtedness for borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement not reasonably be expected to delayexceed $10 million in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries; provided that no such indebtedness shall contain covenants that materially restrict the Offer, adversely affect the Merger or impede Parent’s ability to obtain that are materially inconsistent with the FinancingFinancing Commitments in effect as of the date hereof;
(viixi) except as specifically contemplated in Section 5.1(b) of for transactions among the Company Disclosure Scheduleand its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its material properties or assets (excluding sales of finished goods inventories in the ordinary course of business), including the capital stock of Subsidiaries;
(xii) shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Specified Contract in any material respect in a manner which is adverse to the Company other than in the ordinary course of business or enter into any Company Specified Contract other than in the ordinary course of business and other than in response to an unexpected disruption in supply;
(xiii) shall not make any capital expenditures having an aggregate value in excess of (i) with respect to the Company’s fiscal year ending June 30, 2007, together with the amount of capital expenditures made by the Company through the date hereof, $42 million and (ii) with respect to the Company’s fiscal quarter ending September 30, 2007, $10 million;
(xiv) shall not make any investment in excess of $5,000,000 500,000 in the aggregate, whether by purchase of stock or securities ofsecurities, contributions to capital tocapital, property transfers, or purchase of entering into binding agreements with respect to any property such investment or assets of any other Personacquisition;
(viiixv) shall not make any acquisition of another Person or businessbusiness in excess of $500,000 in the aggregate, whether by purchase of stock or securities or securities, contributions to capital in excess of $5,000,000 in the aggregatecapital, other than acquisitions pursuant property transfers, or entering into binding agreements with respect to Contracts in effect as of the date of this Agreementany such investment or acquisition;
(ixxvi) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts shall not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice, (B) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 500,000 in the aggregate (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any obligation claims, liabilities or liability of the Company obligations in excess of such amount, in each case, other than in the ordinary course consistent with past practice;
(xiixvii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI shall not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election, (B) change any method of reporting for Tax purposes, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make or surrender any claim for a material refund of Taxes, in the case of each of (C) or (D) in excess of $1,000,000reorganization;
(xviii) shall not take any material action with respect to any affiliate of the Company (other than in any wholly owned Subsidiaries of the Company) that is outside the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or;
(xix) shall not agree to take or take, make any commitment to take take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.1(b); providedand
(xx) shall not, that nothing and shall not permit any of its Subsidiaries to, agree, in this Section 5.1(b) will preclude the fiduciaries writing or otherwise, to take any of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent agrees with the Company, on behalf of this Section 5.1 itself and its Subsidiaries and affiliates, that, between the date hereof and the definition Effective Time, Parent shall not, and shall not permit any of Company its Subsidiaries or affiliates to, take or agree to take any action (including entering into agreements with respect to any acquisitions, mergers, consolidations or business combinations) which would reasonably be expected to result in, individually or in the aggregate, a Parent Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.
Appears in 1 contract
Conduct of Business by the Company and Parent. (a) From and after the date hereof and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.18.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), (iii) as may be contemplated, required or permitted by this Agreement, or (iv) as set forth in Section 5.1(a) 6.1 of the Company Disclosure Schedule, or the Company covenants and agrees with Parent that the business of the Company and its Subsidiaries shall be conducted in, and such entities shall not take any action except in, the ordinary course of business and, to the extent consistent therewith, the Company and its Subsidiaries shall use their commercially reasonable efforts to preserve their business organizations intact, maintain in all material respects their respective existing relations with customers, suppliers, distributors, creditors, lessors and others having material business dealings with the Company and its Subsidiaries and keep available the services of the Company’s and its Subsidiaries’ present executive officers and key employees and agents.
(iiib) as otherwise consented Subject to by Parent with respect to the exceptions contained in clauses (Ai) through (iv) of Section 6.1(a) , the Company agrees with Parent, on behalf of itself and (B) below its Subsidiaries, that between the date hereof and the Effective Time, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company willCompany:
(i) shall not, and will cause each shall not permit any of its Subsidiaries that is not wholly-owned to, declare, set aside, authorize or pay any dividends on, or make any distribution with respect to, its outstanding shares of capital stock (whether in cash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid or made to the Company by its wholly-owned Subsidiaries or on a pro rata basis by other Subsidiaries;
(ii) shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, 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) except as required by written agreements, the Company Benefit Plans or the Company Foreign Plans existing on the date hereof or as otherwise required by applicable Laws (including Section 409A of the Code), shall not, and shall not permit any of its Subsidiaries to (A) conduct its business in all material respects in increase the ordinary course consistent with past practicecompensation, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships and to retain the services of its key officers and key employeesbonus or pension, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency welfare, severance or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactions.
(b) Without limiting the generality of the foregoingbenefits of, between the date hereof and the Effective Time, except (i) as set forth in Section 5.1(b) of the Company Disclosure Schedule, (ii) as Parent may consent in writing (which consent, with respect to any matter referred to in items (v), (vii), (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividendbonus to, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or new equity awards to any director, officer, employee or other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary;
(v) purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than any of the foregoing that is pursuant to working capital borrowings or letter of credit issuances under existing credit facilities, in each case, in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) of the Company Disclosure Schedule, make any investment in excess of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement;
(ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or (B) any Contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors service provider of the Company or any of its Subsidiaries, Subsidiaries except for (i) increases in base salary in the ordinary course of business consistent with past practice, practice for employees who are not officers or (Bii) pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its Subsidiaries, except with respect to officers, directors and consultants increases for employees who are not officers in the ordinary course of business consistent with past practicepractice in connection with new hires, promotions, relocations or international assignments (it being understood that new hires include persons who become employees of the Company as a result of an acquisition), (B) enter into any employment, change of control, termination, severance or retention agreement with any employee of the Company other than, in the case of employees who earn less than $200,000 annually, (i) to the extent necessary to replace an agreement with a departing employee, (ii) for employment agreements terminable on less than 30 days’ notice without penalty, and (iii) for severance agreements entered into with employees in the ordinary course of business in connection with terminations of employment, pursuant to which the terminated employee executes a release of claims against the Company, providing for additional severance of no more than six months of base salary, (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or other service providers of the Company or any of its Subsidiaries or any of their beneficiaries, (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 Benefit Plan, to the extent not already provided in any such Company Benefit Plan, (E) 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 (F) forgive any loans to directors, officers, employees or other service providers of the Company or any of its Subsidiaries;
(iv) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Laws;
(v) shall not, and shall not permit any of its Subsidiaries to, adopt or propose any amendments to its certificate of incorporation or by-laws or similar applicable charter documents;
(vi) except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the lapsing issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of forfeiture restrictions its capital stock or conditions other ownership interest in the Company or any 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 equity such shares of capital stock, ownership interest or equityconvertible or exchangeable securities, or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof), other than (A) issuances of Shares in respect of any exercise of Company Stock Options outstanding on the date hereof, (B) the sale of Shares pursuant to the exercise of options to purchase Shares if necessary to effectuate an optionee direction upon exercise or for withholding of Taxes, (C) the acquisition of Shares from a holder of a Company Stock Option or Restricted Shares (as hereinafter defined) in satisfaction of Tax withholding obligations or in payment of the exercise price and (D) the acquisition of Shares through open market purchases to satisfy obligations under Company Benefit Plans;
(vii) except for transactions among the Company and its wholly-based awardsowned Subsidiaries, or among the Company’s wholly-owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of its capital stock or any rights, warrants or options to acquire any such shares;
(viii) shall not, and shall not permit any of its Subsidiaries to, incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), except for (A) any indebtedness for borrowed money among the Company and its wholly-owned Subsidiaries, or among the Company’s wholly-owned Subsidiaries, (B) indebtedness for borrowed money incurred to replace, renew, extend, refinance or refund any existing indebtedness for borrowed money on customary commercial terms, (C) guarantees by the Company of indebtedness for borrowed money of Subsidiaries of the Company, which indebtedness is incurred in compliance with this Section 6.1(b), (D) establish or cause indebtedness for borrowed money incurred pursuant to agreements in effect prior to the funding execution of this Agreement, including the Company’s existing credit facility, that (1) do not exceed $100 million in the aggregate outstanding (in addition to any “rabbi trust” or similar arrangementborrowings outstanding as of the date of this Agreement thereunder) and (2) are on terms that allow for prepayment without penalty other than LIBOR breakage costs, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi) except indebtedness incurred in the ordinary course of business consistent with past practicepractice in respect of foreign currency exchange contracts, waivelease financing for equipment sold to customers and liabilities under customer lease arrangements, release(F) indebtedness incurred to consummate the transactions specifically set forth on Section 6.1(b)(x) of the Company Disclosure Schedule, assignand (G) additional indebtedness for borrowed money not to exceed $50 million in aggregate principal amount outstanding at any time incurred by the Company or any of its Subsidiaries other than in accordance with clauses (A)-(F), settle inclusive;
(ix) except for transactions among the Company and its wholly-owned Subsidiaries or compromise among the Company’s wholly-owned Subsidiaries, shall not transfer, sell, lease, license, exchange or swap, mortgage, pledge, allow to lapse or expire or otherwise encumber (including securitizations), or subject to any claimLien (other than Permitted Liens) or otherwise dispose of any of its properties or assets, action or proceedingincluding the capital stock of its Subsidiaries, other than waiversin transactions involving less than $5 million individually or $10 million in the aggregate except pursuant to existing agreements in effect prior to the execution of this Agreement and except to the extent constituting capital expenditures or in the ordinary course of business;
(x) except for transactions among the Company and its wholly-owned Subsidiaries or among the Company’s wholly-owned Subsidiaries and except for capital expenditures in the ordinary course of business, releases(A) shall not purchase or acquire any properties or operating assets or businesses of a third party, assignmentsexcept pursuant to the agreements set forth in Section 6.1 of the Company Disclosure Schedule, settlements or compromises that involve only in the payment ordinary course of monetary damages business, (B) except for mergers of Subsidiaries in connection with transactions permitted by clause (x)(A) above, shall not, and shall not permit any of its Subsidiaries to, 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 restructure, reorganize or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or material restrictions on its assets, operations or businesses, and (C) shall not make any loans, advances, guarantees or capital contributions to or investments in any person in excess of $1,000,000 20 million in the aggregate;
(xi) shall not, and shall not permit any of its Subsidiaries to, other than in the ordinary course of business, (A) modify, amend, terminate or waive any obligation material rights under any Company Material Contract in a manner which is adverse to the Company, or liability of the Company (B) settle any litigation, arbitration or other similar proceedings for an amount in excess of such amount$10 million (net of insurance coverage) in the aggregate;
(xii) amend other than in the ordinary course of business and other than in connection with a transaction or waive other action specifically permitted by clause (iii), (vi), (viii), (ix) or (x) hereof, shall not, and shall not permit any provision of its Subsidiaries to, enter into any Contracts that would have been a Contract listed in the Charter Documentsdefinition of Company Material Contract had it been entered into prior to the execution of this Agreement;
(xiii) take any action that is intended or would reasonably be expected to result in shall not, and shall not permit any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidationto, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than except as may be required by GAAP Law or applicable Law;
(xvii) in order to claim refunds or credits, (A) make, change or revoke any material Tax election, (B) change file any method of reporting for amended Tax purposesReturn, (C) settle or compromise any material Tax claim, audit or dispute, or (D) make liability for Taxes or surrender any material claim for a material refund of Taxes, in the case of each of (C) or (D) execute or consent to any waivers extending the statutory period of limitations applicable to any material Tax Return, which period has not yet expired or (E) change any method of Tax accounting or file for any change in excess of $1,000,000Tax accounting method;
(xviiixiv) other than shall not, and shall not permit any of its Subsidiaries to, knowingly take any action that is reasonably likely to result in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the CompanyTender Offer Conditions not being satisfied; orand
(xixxv) agree to take shall not, and shall not permit any of its Subsidiaries to, knowingly agree, in writing or make any commitment otherwise, to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Planforegoing actions.
(c) For purposes Parent shall not knowingly take or permit any of this Section 5.1 and its affiliates to take any action that is reasonably likely to (i) result in any of the definition conditions to the Offer not being satisfied or in any of Company Material Adverse Effect, the consent conditions to the Merger set forth in Article VII not being satisfied or (ii) result in any material delay of the consummation of the Offer or the Merger or any Officer Shareholder will be deemed of the consent of Parentother transactions contemplated hereby.
Appears in 1 contract
Samples: Merger Agreement (Respironics Inc)
Conduct of Business by the Company and Parent. (a) From and after the date hereof of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.17.1 (the “Termination Date”), and except (i) as may be required by applicable Law or as expressly required by this Agreement or as permitted by Section 5.1(b)Law, (ii) as disclosed may be agreed in Section 5.1(a) of the Company Disclosure Schedule, or (iii) as otherwise consented to writing by Parent with respect to clauses (A) and (B) below (which consent shall not be unreasonably withheld, conditioned delayed or delayedconditioned), (iii) as otherwise required by this Agreement or (iv) as set forth in Section 5.1(a) of the Company Disclosure Letter, the Company will, covenants and will cause each of its Subsidiaries to agrees with Parent that (A) conduct the business of the Company and its business in all material respects in Subsidiaries shall be conducted in, and such entities shall not take any action except in, the ordinary course consistent with past practiceof business, (B) the Company and its Subsidiaries shall use commercially reasonable efforts to preserve intact their present business organizations and to preserve their relationships with significant distributors and suppliers and (C) it will use commercially reasonable efforts to maintain insurance coverage on substantially comparable terms and preserve intact its business organization and advantageous business relationships and to retain in substantially comparable amounts as maintained on the services date of its key officers and key employees, and (C) take no action which would materially and adversely affect or delay the ability of any of the Parties to obtain any necessary approvals of any regulatory agency or other Governmental Entity required for the Transactions or otherwise materially delay or prohibit the Transactionsthis Agreement.
(b) Without limiting the generality of the foregoing, between the date hereof and the Effective Time, except (i) as may be required by applicable Law, (ii) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as otherwise required by this Agreement or (iv) as set forth in Section 5.1(b) of the Company Disclosure ScheduleLetter, the Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the date hereof and the Effective Time, the Company:
(ii1) as Parent may consent in writing (which consentshall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to any matter referred to its outstanding shares of capital stock (whether in items (vcash, assets, stock or other securities of the Company or its Subsidiaries), except dividends and distributions paid or made by its directly or indirectly wholly owned Subsidiaries;
(vii)2) shall not, (viii), (ix), (x), (xi), (xviii) and (xix) (with respect to any of the foregoing enumerated items) below, shall not be unreasonably withheld, conditioned or delayed) or (iii) as otherwise expressly contemplated by this Agreement, the Company will and will cause each permit any of its Subsidiaries not to:
(i) adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any shares of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable in substitution for any shares of its capital stock, except (A) for dividends paid by any direct or indirect wholly owned Subsidiary to the Company or to any other direct or indirect wholly owned Subsidiary, and one regular quarterly dividend paid by the Company on its Common Shares not to exceed $0.15 per share, declared and paid consistent with prior timing and (B) in connection with the cashless exercises pursuant to the exercise of stock options issued and outstanding as of the date hereof under the Company Stock Plans;
(iii) grant any Person any right to acquire any shares of its capital stock;
(iv) issue any shares of capital stock except pursuant to (A) the exercise of Company Stock Options, (B) the vesting of Company RSUs or Company Performance Shares, granted under the Company Stock Plans and outstanding as of the date hereof and in accordance with the terms of such instruments as of the date hereof, and (C) the Company’s deferred compensation plans in accordance with the terms thereof as of the date hereof, and other than the issuance of shares transaction by a wholly owned Subsidiary of the Company to the Company or another which remains a wholly owned SubsidiarySubsidiary after consummation of such transaction;
(v3) purchaseexcept (x) as required by existing written agreements or Company Benefit Plans, sellor (y) to comply with applicable Law, transfershall not, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate to any Person (other than to a wholly owned Subsidiary), other than encumbrances, acquisitions or dispositions pursuant to Contracts in effect as of the date of this Agreement or in the ordinary course of business consistent with past practice;
(vi) incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money or offer, place or arrange any issue of debt securities, other than and shall not permit any of its Subsidiaries to (A) increase the foregoing that is pursuant compensation or other benefits payable or provided to working capital borrowings or letter of credit issuances under existing credit facilitiesEmployees, in each case, except increases in the ordinary course of business consistent with past practice and would for Employees who are not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the Financing;
(vii) except as specifically contemplated in Section 5.1(b) officers of the Company Disclosure Schedule, make any investment in excess for purposes of $5,000,000 in the aggregate, whether by purchase of stock or securities of, contributions to capital to, or purchase of any property or assets of any other Person;
(viii) make any acquisition of another Person or business, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than acquisitions pursuant to Contracts in effect as Section 16 of the date of this Agreement;
Exchange Act (ix) except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate (A) any Company Material Contract or Contract which if entered into prior to the date hereof would be a Company Material Contract or “Section 16 Officers”); (B) enter into any Contracts not in the ordinary courseemployment, involving the commitment change of control, severance, retention or transfer of value in excess of $1,000,000 in the aggregate in other similar agreement or arrangement with any year;
(x) except to the extent required by Law or any Company Benefit Plan in effect as of the date hereof, (A) increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors employee of the Company or any of its Subsidiaries, except (1) to the extent necessary to replace an agreement with a departing employee who is not a Section 16 Officer, consistent with prevailing market practices, or (2) for increases severance agreements entered into with employees of the Company or its Subsidiaries in base salary the ordinary course of business in connection with terminations of employment and providing for amounts no greater than those provided under the Company severance guidelines set forth in Section 5.1(b) of the Company Disclosure Letter; or (C) except as permitted pursuant to clause (B) above, establish, adopt, enter into or amend (other than with respect to any ordinary course administrative or ministerial matters) any Company Benefit Plan (or any plan, agreement or arrangement that would be a Company Benefit Plan if it were in existence as of the date of this Agreement), collective bargaining agreement, plan, agreement, trust, fund, policy or arrangement for the benefit of any Employees or any of their beneficiaries, or increase the benefit pool, contribution rate or funding obligation or other obligations or liabilities under any such plan, agreement or arrangement;
(4) shall not, and shall not permit any of its Subsidiaries to, enter into or make any loans or advances to any of its officers, directors, employees, agents or consultants (other than advances in the ordinary course of business consistent with past practice for business expenses in accordance with the Company’s existing policies) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons, except as required by the terms of any Company Benefit Plan;
(5) shall not, and shall not permit any of its Subsidiaries to, change financial accounting policies or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law;
(6) shall not, and shall not permit any of its Subsidiaries to, adopt any amendments to its certificate of incorporation that require a vote of the Company’s stockholders to approve the same or material bylaws or similar applicable charter documents;
(7) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit any of its Subsidiaries to:
(i) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest in the Company or any 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;
(ii) take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan (except as otherwise provided by the terms of this Agreement or the express terms of any unexercisable options outstanding on the date hereof);
(iii) grant or issue any equity-based compensation awards, whether settled in stock, cash, or otherwise, other than
(1) issuances of shares of Company Common Stock in respect of any exercise of Company Stock Options and settlement of any Restricted Shares outstanding on the date hereof; and
(2) the sale of shares of Common Stock pursuant to the exercise of options to purchase Common Stock if necessary to effectuate an optionee’s direction upon exercise or for withholding of Taxes.
(8) shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of the Company’s capital stock or any rights, warrants or options to acquire any such shares, other than the acquisition of shares of Company Common Stock upon (1) the exercise of Company Stock Options using such shares for the payment of the exercise price or (2) the exercise of Company Stock Options if shares of Company Common Stock are used to satisfy obligations with respect to withholding Taxes;
(9) shall not, and shall not permit any of its Subsidiaries to, (A) incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise) (other than letters of credit or similar arrangements issued to or for the benefit of suppliers and manufacturers in the ordinary course of business and borrowings in the ordinary course of business under the Company’s existing revolving credit facility), (B) issue, sell or amend any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another person, enter into any “keep well” or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, (C) make any loans, advances or capital contributions to, or investment in, any other person, other than the Company or any of its direct or indirect wholly owned Subsidiaries or (D) become a party to any hedging, derivatives or similar contract or arrangement that expires on or after December 31, 2008;
(10) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and shall not permit its Subsidiaries to, sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Company Permitted Liens) or otherwise dispose of any material portion of its material properties or tangible or intangible assets, including the capital stock of Subsidiaries, other than (A) sales and non-exclusive licenses of products and services of the Companies and its Subsidiaries in the ordinary course of business consistent with past practice, (B) pay any severance dispositions in the ordinary course of business of assets no longer used or retirement benefits useful at the time of such disposition and (C) pursuant to any employeesexisting agreements in effect prior to the execution of this Agreement;
(11) shall not, directors, consultants or independent contractors of the Company or and shall not permit any of its SubsidiariesSubsidiaries to, acquire or license (including by merger, consolidation or acquisition of stock or assets or any other business combination), or enter into any binding memorandum of understanding, letter of intent or other agreement, arrangement or understanding to acquire or license (x) any corporation, partnership, other business organization or any division thereof or equity interests therein or a substantial portion of the assets thereof or (y) any assets or other rights except with respect to officersin the case of clause (y), directors and consultants in the ordinary course of business consistent with past practice, (C) accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards, (D) establish or cause the funding of any “rabbi trust” or similar arrangement, (E) establish, adopt, amend or terminate any arrangement that would be a Company Benefit Plan if in effect on the date hereof or (F) enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;
(xi12) except in shall not, and shall not permit any of its Subsidiaries to, (A) make or rescind any material express or deemed election relating to Taxes (including any election for any joint venture, partnership, limited liability company or other investment where the ordinary course of business Company has the capacity to make such binding election, but excluding any election that must be made periodically and is made consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of $1,000,000 or any obligation or liability of the Company in excess of such amount;
(xii) amend or waive any provision of the Charter Documents;
(xiii) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied;
(xiv) enter into any “non-compete” or similar agreement that would materially restrict the businesses of the Surviving Corporation, its Subsidiaries or its current or future Affiliates following the Effective Time;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity;
(xvi) implement or adopt any material change in its Tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable Law;
(xvii) (A) make, change or revoke any material Tax election), (B) change any method of reporting for Tax purposesaccounting, (C) settle or compromise file any amended Tax Return with respect to a material Tax claimamount of Taxes, audit or dispute, or (D) make agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Taxes, (E) enter into any closing agreement with respect to any material Taxes or (F) surrender any right to claim for a material refund Tax refund;
(13) shall not, and shall not permit any of Taxesits Subsidiaries to, in the case of each of (C) or (D) make capital expenditures in excess of $1,000,00015,000,000 in the aggregate prior to March 31, 2008;
(xviii14) other than shall not, and shall not permit any of its Subsidiaries to, modify, amend, terminate or waive any rights under any Company Material Contract in any material respect if the Company or its Subsidiaries would be prohibited from entering into the same pursuant to clause (xv) below as so amended, modified or waived;
(15) shall not, and shall not permit any of its Subsidiaries to, enter into any new Contract (A) that would be a Company Material Contract if entered into prior to the date hereof unless such Contract both (1) is entered into in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligations with any Affiliate of the Company; or
(xix) agree to take or make any commitment to take any of the actions prohibited by this Section 5.1(b); provided, that nothing in this Section 5.1(b) will preclude the fiduciaries of the 401(k) Plan from purchasing, or selling or otherwise disposing of, Common Shares in the open market in connection with administering the common stock fund being maintained in connection with said 401(k) Plan.
(c) For purposes of this Section 5.1 and the definition of Company Material Adverse Effect, the consent of any Officer Shareholder will be deemed the consent of Parent.and
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