Conduct of Business by the Company Pending the Closing. Between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, except (w) as set forth in Section 5.1 of the Company Disclosure Schedule, (x) as required by applicable Law, (y) as otherwise expressly contemplated by any other provision of this Agreement, or (z) with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will use its commercially reasonable efforts to (i) conduct its operations in all material respects in the ordinary course of business (ii) keep available the services of the current officers, employees and consultants of the Company, (iii) preserve the goodwill of the Company and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current relationships of the Company with its material customers, distributors, suppliers, Governmental Entities and other Persons with which the Company has significant business relations. Without limiting the foregoing, except in accordance with an IOC Exception, the Company shall not between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, directly or indirectly, take any of the following actions: (a) amend its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer or encumber any shares of capital stock of, or other Equity Interests in, the Company, other than the issuance of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing terms; (c) sell, pledge, dispose of, transfer, lease, guarantee or subject to any Lien (other than Permitted Liens) any material property or assets of the Company (other than Intellectual Property), except (i) pursuant to existing Contracts or (ii) dispositions of inventory or obsolete assets, in each case, in the ordinary course of business; (d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Intellectual Property, except in the ordinary course of business; (e) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock or other Equity Interests; (f) reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or other Equity Interests; (g) merge or consolidate the Company with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company; (h) acquire (including by merger, consolidation, or acquisition of stock or assets) any Person or assets, other than acquisitions of inventory, raw materials and other property in the ordinary course of business; (i) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations of any Person for borrowed money; (j) enter into any Affiliate Contract; (k) make any loans, advances or capital contributions to, or investments in, any other Person (other than business expenses paid or advanced to or on behalf of directors, officers, employees or independent contractors in the ordinary course of business); (l) terminate, cancel or renew, or agree to any material amendment to or waiver under any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material Contract, in each case other than in the ordinary course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract with a customer of the Company; (m) make any capital expenditure in excess of (A) the Company’s capital expenditure budget as set forth on Section 5.1(m) of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000; (n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereof, or as set forth in Section 5.1(n) of the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend any Company Benefit Plan, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practice, provided that the foregoing shall not materially increase the costs or expenses to the Company (including the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any director, or any employee, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) accelerate the payment, funding or vesting of any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations in the ordinary course of business consistent with past practice with respect to any such person who has or will have total annual base compensation of less than $200,000 (other than to replace individuals who are terminated for “cause” or who voluntarily retire or resign); (o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company; (p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law; (q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law; (r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity; (s) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America; (t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business that involve only the payment of monetary damages not in excess of $500,000 individually or $1,500,000 in the aggregate; (ii) does not impose any equitable relief or any restriction that would materially impact the business of the Company, (iii) does not involve an admission of guilt or liability by the Company, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Company; (u) except in the ordinary course of business or in accordance with GAAP, make (to the extent inconsistent with past practice), change or revoke any material Tax election, adopt or change any material Tax accounting method, or settle or compromise any material Tax claim, audit or assessment; or (v) authorize or enter into any Contract or otherwise make any commitment to do any of the foregoing.
Appears in 2 contracts
Samples: Merger Agreement (Iteris, Inc.), Merger Agreement (Iteris, Inc.)
Conduct of Business by the Company Pending the Closing. Between The Company agrees that, between the date of this Agreement Date and continuing until the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7pursuant to its terms or the Effective Time, except (w) as set forth in Section 5.1 5.2 of the Company Disclosure Schedule, (x) Schedule or as required by applicable Law, (y) as otherwise expressly contemplated specifically permitted by any other provision of this Agreement, or (z) with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”)unless authorized and previously approved in writing by Parent, the Company will, and will cause each of its Subsidiaries to conduct its operations only in the ordinary and usual course of business consistent with past practice, and to use its commercially reasonable efforts to (i) conduct preserve intact its operations in all material respects in the ordinary course of current business (ii) organization, keep available the services of the its current officerskey employees and officers and maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees and consultants of the Company, (iii) preserve the goodwill of the Company and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current other persons having business relationships of the Company with its material customers, distributors, suppliers, Governmental Entities and other Persons with which the Company has significant business relationsParent. Without limiting the foregoing, and as an extension thereof, except as set forth in accordance with an IOC ExceptionSection 5.2 of the Company Disclosure Schedule or as specifically permitted by any other provision of this Agreement, the Company shall not (unless required by applicable Law), between the date of this Agreement Date and continuing until the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7pursuant to its terms or the Effective Time, directly or indirectly, take do, or agree to do, any of the following actionsunless authorized and previously approved in writing by Parent:
(a) amend or otherwise change its certificate of incorporation or bylaws by-laws or equivalent organizational documents;
(b) (A) issue, sell, pledge, dispose of, grant, transfer transfer, encumber, or encumber authorize the issuance, sale, pledge, disposition, grant, transfer, or encumbrance of any shares of capital stock of, or other Equity Interests in, the CompanyCompany of any class, or securities convertible or exchangeable or exercisable for any shares of such capital stock or other Equity Interests, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or other Equity Interests or such convertible or exchangeable securities, or any other ownership interest (including, without limitation, any such interest represented by contract right), of the Company other than the issuance of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) Common Stock upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing terms;
terms or upon the conversion of Company Preferred Stock or other convertible securities of the Company, or (cB) sell, pledge, dispose of, transfer, lease, license, guarantee or subject to any Lien (other than Permitted Liens) encumber, or authorize the sale, pledge, disposition, transfer, lease, license, guarantee or encumbrance of, any material property or assets of the Company (other than Intellectual Property)Company, except (i) pursuant to existing Contracts or (ii) dispositions commitments or the sale or purchase of inventory or obsolete assets, in each case, goods in the ordinary course of businessbusiness consistent with past practice;
(d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Intellectual Property, except in the ordinary course of business;
(ec) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock or other Equity Interestsenter into any agreement with respect to the voting of its capital stock;
(fd) reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock stock, other Equity Interests or other Equity Interestssecurities (other than in connection with the termination of an employee pursuant to existing repurchase rights);
(ge) merge or consolidate the Company with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company;
(hA) acquire (including including, without limitation, by merger, consolidation, or acquisition of stock or assets) any Person interest in any person or any division thereof or any assets, other than acquisitions of inventory, raw materials and other property assets in the ordinary course of business;
business consistent with past practice, (iB) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise)for, the obligations of any Person person for borrowed money;
(j) enter into any Affiliate Contract;
(k) make any loans, advances or capital contributions to, or investments in, any other Person money (other than business expenses paid or advanced to or on behalf of directorsordinary course trade accounts payable, officers, employees or independent contractors which shall not be material in the ordinary course of businessaggregate);
, (lC) terminate, cancel or renewrequest any material change in, or agree to any material amendment to or waiver under change in, any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material Contract, in each case other than in the ordinary course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract with a customer of the Company;
(m) make any capital expenditure in excess of (A) the Company’s capital expenditure budget as set forth on Section 5.1(m) of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000;
(n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereof, or as set forth in Section 5.1(n) of the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend any Company Benefit Plan, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practice, provided that the foregoing shall or (D) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not materially be permitted under this Section 5.2(e);
(f) (A) increase the costs compensation or expenses benefits payable or to the Company (including the Parent after the Closing) of sponsoringbecome payable to its directors, maintaining, administering officers or contributing to such Company Benefit Planemployees; (B) grant or modify any rights to severance, change-in-control or termination pay to, or enter into any employment or severance agreement with, any director, officer or other employee of the Company, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, independent contractor, except to the extent required by applicable Law; or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) take any affirmative action to amend or waive any performance or vesting criteria, accelerate the paymentvesting, exercisability or funding or vesting of exercise any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities discretion under any Company Benefit Plan; ;
(g) (A) pay, discharge or satisfy any claims, liabilities or obligations (Eabsolute, accrued, contingent or otherwise) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations except in the ordinary course of business consistent with past practice and in accordance with respect to their terms, (B) accelerate or delay collection of notes or accounts receivable in advance of or beyond their regular due dates or the dates when the same would have been collected in the ordinary course of business consistent with past practice, or (C) delay or accelerate payment of any account payable in advance of its due date or the date such person who has or will liability would have total annual base compensation been paid in the ordinary course of less than $200,000 (other than to replace individuals who are terminated for “cause” or who voluntarily retire or resign)business consistent with past practice;
(o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(rh) make any change in accounting policies, practices, principles, methods policies or procedures, other than except as required by GAAP or by a Governmental Entity;
(s) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromiseswaive, settlements or agreements in the ordinary course of business that involve only the payment of monetary damages not in excess of $500,000 individually or $1,500,000 in the aggregate; (ii) does not impose any equitable relief or any restriction that would materially impact the business of the Companyrelease, (iii) does not involve an admission of guilt or liability by the Companyassign, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Company;
(u) except in the ordinary course of business or in accordance with GAAP, make (to the extent inconsistent with past practice), change or revoke any material Tax election, adopt or change any material Tax accounting method, or settle or compromise any material claims, or any material litigation or arbitration;
(j) change its method of accounting, make any material tax election, settle or compromise any material liability for Taxes, amend any Tax claimReturn or file any refund for Taxes;
(k) take, audit or assessmentagree to take, any action that would reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code or fail to take any action that would reasonably be expected to be necessary to cause the Merger to so qualify;
(l) modify, amend or terminate, or waive, release or assign any material rights or claims with respect to any confidentiality or standstill agreement to which the Company is a party;
(m) 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; or
(vn) authorize or enter into any Contract agreement or otherwise make any commitment to do any of the foregoing. The Company shall fully and promptly inform Parent of all discussions, negotiations or activities related to the license, sale, or potential license or sale, of any asset of the Company, and shall promptly provide Parent copies of any written materials (including materials in electronic form or otherwise) received from any third party in connection with any of the foregoing.
Appears in 2 contracts
Samples: Merger Agreement (RespireRx Pharmaceuticals Inc.), Merger Agreement (Cortex Pharmaceuticals Inc/De/)
Conduct of Business by the Company Pending the Closing. Between The Company agrees that between the date of this Agreement hereof and the earlier of the Effective Time and or the termination of date, if any, on which this Agreement in accordance with Article 7is validly terminated pursuant to Section 9.1, except (w) as set forth in Section 5.1 6.1 of the Company Disclosure ScheduleLetter, (x) as specifically permitted or required by this Agreement or the Letter Agreement, as required by applicable LawLaw or as consented to in writing by Parent (with respect to clauses (i) (with respect to the organizational documents of any Company Subsidiary only), (yix), (x), (xi), (xii), (xiii), (xiv), (xvi), (xvii), (xix), (xxii) as otherwise expressly contemplated by any other provision and (xxiv) of this AgreementSection 6.1(b) only, or (z) with the prior written such consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will (a) shall, and shall cause each Company Subsidiary to, use its commercially reasonable best efforts to (i) conduct its operations business in all material respects in the ordinary course of business, including by (i) preserving intact its and their present business organizations, goodwill and ongoing businesses, (ii) keep keeping available the services of the current officers, its and their present officers and other key employees (other than where termination of such services is for cause) and consultants of the Company, (iii) preserve the goodwill of the Company preserving its and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current their relationships of the Company with its material customers, distributorssuppliers, suppliersvendors, resellers, licensors, licensees, Governmental Entities and other Persons with which whom it and they have material business relations (it being agreed by the Parties that with respect to the matters specifically addressed by any provision of this Section 6.1(b) such specific provisions shall govern over the more general provision of this Section 6.1(a)); and (b) shall not, nor shall the Company has significant business relations. Without limiting the foregoing, except in accordance with an IOC Exception, the permit any Company shall not between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, directly or indirectly, take any of the following actionsSubsidiary to:
(ai) amend its amend, modify, waive, rescind, change or otherwise restate the Company’s or any Company Subsidiary’s certificate of incorporation or incorporation, bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer or encumber any shares of capital stock of, or other Equity Interests in, the Company, other than the issuance of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing terms;
(c) sellauthorize, pledge, dispose of, transfer, lease, guarantee or subject to any Lien (other than Permitted Liens) any material property or assets of the Company (other than Intellectual Property), except (i) pursuant to existing Contracts or (ii) dispositions of inventory or obsolete assets, in each case, in the ordinary course of business;
(d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Intellectual Property, except in the ordinary course of business;
(e) declare, set aside, make or pay any dividend dividends on or make any distribution with respect to its outstanding shares of capital stock or other distribution equity interests (whether payable in cash, stockassets, property shares or a combination thereofother securities of the Company or any Company Subsidiary) (other than dividends or distributions made by any wholly owned Company Subsidiary to the Company or any wholly owned Company Subsidiary), or enter into any agreement and arrangement with respect to voting or registration, or file any registration statement with the SEC with respect to any, of its capital stock or other equity interests or securities;
(iii) split, combine, subdivide, reduce or reclassify any of its capital stock or other Equity Interests;
(f) reclassify, combine, split, subdivide or amend the terms ofequity interests, or redeem, purchase or otherwise acquire, directly or indirectly, acquire any of its capital stock or other equity interests, or issue or authorize the issuance of any of its capital stock or other equity interests or any other securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity interests, except for (A) the acceptance of shares of Company Common Stock as payment of the exercise price of Company Options or for withholding Taxes in respect of Company Equity InterestsAwards or (B) any such transaction involving only wholly owned Company Subsidiaries;
(giv) merge issue, deliver, grant, sell, pledge, dispose of or consolidate encumber, or authorize the issuance, delivery, grant, sale, pledge, disposition or encumbrance of, any shares in the capital stock, voting securities or other equity interest in the Company or any Company Subsidiary or any securities convertible into or exchangeable or exercisable for any such shares, voting securities or equity interest, or any rights, warrants or options to acquire any such shares, voting securities or equity interest or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units or take any action to cause to be exercisable or vested any otherwise unexercisable or unvested Company Equity Award under any existing Company Equity Plan (except as otherwise provided by the express terms of any Company Equity Award), other than (A) issuances of Company Common Stock in respect of any exercise of Company Options outstanding on the date hereof or the vesting or settlement of Company Equity Awards outstanding on the date hereof, in all cases in accordance with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization their respective terms as of the Companydate hereof, (B) issuances of Company Common Stock in respect of any awards outstanding under the Company ESPP in respect of the Current ESPP Offering Period, (C) sales of shares of Company Common Stock pursuant to the exercise of Company Options if necessary to effectuate an optionee direction upon exercise or pursuant to the settlement of Company Equity Awards in order to satisfy Tax withholding obligations, or (D) transactions solely between the Company and a wholly owned Company Subsidiary or solely between wholly owned Company Subsidiaries;
(hv) except as required by any Company Benefit Plan as in existence as of the date hereof and set forth on Section 4.10(a) of the Company Disclosure Letter, (A) increase the compensation or benefits payable or to become payable to any of its directors, executive officers or employees, (B) grant to any of its directors, executive officers or employees any increase in severance or termination pay, (C) pay or award, or commit to pay or award, any bonuses, retention or incentive compensation to any of its directors, executive officers or employees, (D) enter into any employment, severance, or retention agreement (excluding offer letters that provide for no severance or change in control benefits) with any of its directors, executive officers or employees, (E) establish, adopt, enter into, amend or terminate any collective bargaining agreement or Company Benefit Plan, except for any amendments to health and welfare plans in the ordinary course of business consistent with past practice that do not contravene the other covenants set forth in this clause (v) or materially increase the cost to the Company of maintaining such Company Benefit Plan or the benefits provided thereunder, (F) take any action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Company Benefit Plan, (G) terminate the employment of any employee at the level of vice president or above, other than for cause, (H) hire any new employees, except for non-officer employees at the vice president level and below or (I) provide any funding for any rabbi trust or similar arrangement;
(vi) acquire (including by merger, consolidation, consolidation or acquisition of stock or assetsassets or any other means) or publicly announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, any equity interests in or a material portion of the assets of any Person or assetsany business or division thereof, other than or otherwise engage in any mergers, consolidations or business combinations, except for (A) transactions solely between the Company and a wholly owned Company Subsidiary or solely between wholly owned Company Subsidiaries, (B) acquisitions of inventory, raw materials and other property supplies or equipment in the ordinary course of businessbusiness consistent with past practice or (C) capital expenditures in accordance with clause (xiii) below;
(ivii) incur liquidate (completely or partially), dissolve, restructure, recapitalize or effect any indebtedness for borrowed money other reorganization (including any restructuring, recapitalization or issue reorganization between or among any debt securities of the Company or assume, guarantee or endorsethe Company Subsidiaries), or otherwise as an accommodation become responsible adopt any plan or resolution providing for (whether directly, contingently or otherwise), any of the obligations of any Person for borrowed moneyforegoing;
(j) enter into any Affiliate Contract;
(kviii) make any loans, advances or capital contributions to, or investments in, any other Person Person, except for (other than business A) loans solely among the Company and its wholly owned Company Subsidiaries or solely among the Company’s wholly owned Company Subsidiaries or (B) advances for reimbursable employee expenses paid or advanced to or on behalf of directors, officers, employees or independent contractors in the ordinary course of business);
(lix) terminatesell, cancel lease, license, assign, abandon, permit to lapse, transfer, exchange, swap or renewotherwise dispose of, or agree subject to any material amendment to or waiver under any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material Contract, in each case Lien (other than Permitted Liens), any of its material properties or assets, except (A) dispositions of obsolete or worthless equipment, in the ordinary course of business; provided, that such Contract does not (xB) require nonexclusive license or other nonexclusive grants of rights in or under any Company Intellectual Property or Company Product entered into in the ordinary course of business consistent with past practice with customers of the Company or the Company Subsidiaries, (C) pursuant to make capital expenditures under such transactions solely among the Company Material Contract in excess of $5,000,000 over the term of such Contract and its wholly owned Company Subsidiaries or solely among wholly owned Company Subsidiaries or (yD) obligates pursuant to agreements in effect prior to the Company to pay more than $5,000,000 over the term execution of such Contract, except, in each case, as required under any Contract with a customer of the Company;
(m) make any capital expenditure in excess of (A) the Company’s capital expenditure budget as this Agreement and set forth on in Section 5.1(m6.1(b)(ix)(D) of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000Letter;
(nx) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereof, or as set forth in Section 5.1(n) of the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend or modify any written policies or procedures with respect to the use or distribution by the Company or any Company Benefit PlanSubsidiary of any open source Software;
(xi) enter into or become bound by, or amend, modify, terminate or waive any Contract related to the acquisition or disposition or granting of any license with respect to material Intellectual Property, other than renewals of Company Benefit Plans that are health and welfare plans amendments, modifications, terminations or waivers in the ordinary course of business consistent with past practice, provided that the foregoing shall not materially increase the costs or expenses to the Company otherwise encumber any material Intellectual Property (including by the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any director, or any employee, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) accelerate the payment, funding or vesting granting of any compensation covenants, including any covenant not to xxx or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used covenant not to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultantassert), other than (xA) terminations for “cause”, and (y) hirings or terminations non-exclusive licenses of Company Intellectual Property entered in the ordinary course of business consistent with past practice with respect and (B) amendments and modifications, in each case, to any such person who has existing exclusive, limited distribution rights for Company Products made or will have total annual base compensation of less than $200,000 (other than to replace individuals who are terminated for “cause” or who voluntarily retire or resign);
(o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity;
(s) enter entered into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business consistent with past practice;
(xii) (A) enter into any Contract that involve only would, if entered into prior to the payment date hereof, be a Material Contract of monetary damages not the types referred to in excess of $500,000 individually or $1,500,000 in the aggregate; clauses (i), (ii) does not impose any equitable relief or any restriction that would materially impact the business of the Company), (iii) does not involve an admission of guilt or liability by the Company), (ivv), (xii), (xiii), (xiv) does not relate to or (xix) of Section 4.17(a) or any litigation by other Material Contract outside of the Company’s stockholders ordinary course of business consistent with past practice, (B) (1) materially modify, materially amend, extend or terminate any Material Contract (other than non-renewals occurring in connection with the ordinary course of business) or (2) waive, release or assign any material rights or claims thereunder, in the case of this Agreement or the Transactions, and clause (v2) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Company;
(u) except other than in the ordinary course of business consistent with past practice or (C) materially modify, amend or terminate, or waive or release or assign any material rights under, any Material Government Bid or submit any new Government Contract Bid that would have been considered a Material Government Bid if it were submitted prior to the date hereof;
(xiii) except in accordance with GAAPthe Company’s capital budget provided to Parent prior to the date hereof, make any capital expenditures, enter into agreements or arrangements providing for capital expenditures or otherwise commit to do so;
(to xiv) commence (other than any collection action in the extent inconsistent ordinary course of business consistent with past practice), waive, release, assign, compromise or settle any claim, litigation, investigation or proceeding (for the avoidance of doubt, including with respect to matters in which the Company or any Company Subsidiary is a plaintiff, or in which any of their officers or directors in their capacities as such are parties), other than the compromise or settlement of any claim, litigation or proceeding that is not brought by Governmental Entities and that: (A) is for an amount not to exceed, for any such compromise or settlement individually $1,000,000 or in the aggregate $2,000,000; (B) does not impose any injunctive relief on the Company and the Company Subsidiaries and does not involve the admission of wrongdoing by the Company, any Company Subsidiary or any of their respective officers or directors or otherwise establish a materially adverse precedent for similar settlements by Parent or any Parent Subsidiaries (including following the Effective Time the Company and the Company Subsidiaries); and (C) does not provide for the license of any Intellectual Property or the termination, modification or amendment of any license of Company Intellectual Property;
(xv) make any change in financial accounting policies, practices, principles 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 applicable Law;
(xvi) amend or modify in any material respect any Privacy Statement of the Company or any Company Subsidiary;
(xvii) make, change or revoke any material Tax election, adopt or change any Tax accounting period or material method of Tax accounting, amend any material Tax accounting methodReturn, or file any material Tax Return that is materially inconsistent with a previously filed Tax Return of the same type for a prior taxable period (taking into account any amendments prior to the date hereof and other than inconsistencies intended to take advantage of changes in Law since the date of the previously filed Tax Return), settle or compromise any material liability for Taxes or any Tax claimaudit, audit claim or assessmentother proceeding relating to a material amount of Taxes, enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law), surrender any right to claim a material refund of Taxes, or, except extensions in connection with extensions of time obtained in the ordinary course of business consistent with past practice for the filing of Tax Returns, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes;
(xviii) take any action, or knowingly fail to take any action, which action or failure to act would, or would be reasonably expected to, prevent the Offer and the Merger, taken together, from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(xix) redeem, repurchase, prepay, defease, incur, assume, endorse, guarantee or otherwise become liable for or modify in any material respects the terms of any Indebtedness or any derivative financial instruments or arrangements (including swaps, caps, floors, futures, forward contracts and option agreements), or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), except for any Indebtedness solely among the Company and its wholly owned Company Subsidiaries or solely among wholly owned Company Subsidiaries;
(xx) enter into any transactions or Contracts with any affiliate or other Person that would be required to be disclosed by the Company under Item 404 of Regulation S-K of the SEC;
(xxi) fail to use commercially reasonable efforts to maintain the Company’s insurance policies or comparable replacement policies with respect to the material assets, operations and activities of the Company and the Company Subsidiaries;
(xxii) (A) acquire any real property or enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee), (B) materially modify or amend or exercise any right to renew any Company Lease, or waive any material term or condition thereof or grant any material consents thereunder, (C) grant or otherwise knowingly create or consent to the creation of any material easement, covenant, restriction, assessment or charge affecting any real property leased by the Company, or any interest therein or part thereof, (D) knowingly commit any waste or nuisance on any such property or (E) make any material changes in the construction or condition of any such property, in the case of each of clauses (B) through (E), other than in the ordinary course of business consistent with past practice;
(xxiii) convene any special meeting (or any adjournment or postponement thereof) of the Company Stockholders;
(xxiv) terminate or modify or waive in any material respect any right under any material Company Permit;
(xxv) adopt or otherwise implement any stockholder rights plan, “poison-pill” or other comparable agreement;
(xxvi) subject to Section 7.2, take or cause to be taken any action that would reasonably be expected to materially impede or prevent the consummation of the Transactions on or before the Outside Date; or
(vxxvii) authorize agree or enter into any Contract authorize, in writing or otherwise make any commitment otherwise, to do take any of the foregoingforegoing actions.
Appears in 2 contracts
Samples: Merger Agreement (Tableau Software Inc), Agreement and Plan of Merger (Salesforce Com Inc)
Conduct of Business by the Company Pending the Closing. Between the date of this Agreement and the earlier of the Effective Time and or the termination of this Agreement in accordance with Article ARTICLE 7, except (w) as set forth in Section 5.1 of the Company Disclosure Schedule, (xi) as required by applicable LawLaw or Order, (yii) as otherwise expressly contemplated by any other provision of this Agreement, (iii) as set forth in Section 5.1 of the Company Disclosure Schedule or (ziv) with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will, and will cause each of its Subsidiaries to, use its commercially reasonable efforts efforts, (x) to (i) conduct its business and operations, and the business and operations in all material respects of each of its Subsidiaries, only in the ordinary course of business consistent with past practice and, to the extent consistent therewith, to maintain and preserve intact the Company’s and its Subsidiaries’ business organization, assets and properties, and (iiy) keep available the services of the current officers, employees and consultants of the Company, (iii) Company and each of its Subsidiaries and to preserve the goodwill of the Company and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current relationships of the Company and each of its Subsidiaries with its material customers, suppliers, distributors, supplierslicensors, Governmental Entities licensees and other Persons with which the Company or any of its Subsidiaries has significant business relations. Without limiting the foregoing, except (i) as required by Law or Order, (ii) as otherwise expressly contemplated by any other provision of this Agreement or (iii) as set forth in accordance with an IOC ExceptionSection 5.1 of the Company Disclosure Schedule, the Company shall not, and shall not permit any of its Subsidiaries to, between the date of this Agreement and the earlier of the Effective Time and or the termination of this Agreement in accordance with Article ARTICLE 7, directly or indirectly, take any of the following actions:actions without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed):
(a) amend its certificate of incorporation or bylaws or equivalent organizational documentsdocuments in a manner adverse to Parent or Merger Sub, other than immaterial amendments to applicable organizational documents of the Company’s wholly owned Subsidiaries;
(b) issue, sell, pledge, dispose of, grant, transfer or encumber any shares of capital stock of, or other Equity Interests in, the CompanyCompany or any of its Subsidiaries of any class, or securities convertible into, or exchangeable or exercisable for, any shares of such capital stock or other Equity Interests, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or other Equity Interests or such convertible or exchangeable securities of the Company or any of its Subsidiaries, other than (i) the issuance of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs PRSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing terms or (ii) the issuance of Shares upon the exercise of the Hxxx Capital Warrant in accordance with its terms;
(c) sell, license, pledge, dispose of, transfer, lease, guarantee guarantee, mortgage or subject to any Lien encumber (other than Permitted Liens) any material property or assets (except Company Intellectual Property) of the Company (other than Intellectual Property)or any of its Subsidiaries, except (i) pursuant to existing Contracts or Contracts, (ii) dispositions the sale, license, pledge, disposal, transfer, lease or encumbrance of goods or inventory or obsolete assets, in each case, in the ordinary course of businessbusiness consistent with past practice, (iii) the disposition of obsolete, surplus or worn out assets, inventory or equipment or assets that are no longer used in the ordinary course of the Company’s business or (iv) property or assets immaterial to the Company and its Subsidiaries;
(d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Intellectual Property, except in the ordinary course of businessbusiness consistent with past practice;
(e) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock or other Equity Interests, except for dividends or other distributions paid by a wholly owned Subsidiary of the Company to the Company or another wholly owned Subsidiary of the Company;
(f) reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or other Equity Interests, except with respect to any wholly owned Subsidiary of the Company;
(g) merge or consolidate the Company or any of its Subsidiaries with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, except with respect to any wholly owned Subsidiary of the Company;
(h) acquire (including by merger, consolidation, or acquisition of stock or assets) any Person or assets, other than (i) acquisitions by the Company from any wholly owned Subsidiary or among any wholly owned Subsidiaries of the Company, (ii) acquisitions of inventory, raw materials materials, supplies and other property in the ordinary course of businessbusiness consistent with past practice or (iii) property or assets in an amount not exceeding $500,000 in the aggregate;
(i) (i) repurchase, prepay or incur any indebtedness for borrowed money or Indebtedness, (ii) issue any debt securities or securities, (iii) assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations any Indebtedness of any Person for borrowed money(other than a wholly owned Subsidiary of the Company) or (iv) redeem, repurchase, cancel or otherwise acquire any Indebtedness (directly, contingently or otherwise), except in each case, in connection with the financing of ordinary course trade payables consistent with past practice;
(j) enter into any Affiliate Contract;
(k) make any loans, advances or capital contributions to, or investments in, any other Person (Person, other than any wholly owned Subsidiary of the Company or immaterial advances to its employees in respect of travel or other related business expenses paid or advanced to or on behalf of directors, officers, employees or independent contractors in the ordinary course of business)business consistent with past practice;
(lk) terminate, cancel terminate or renewcancel, or agree to any material amendment to or waiver under any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material ContractContract described in subsection (i) of Section 3.16(a), in each case other than in the ordinary course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract with a customer of the Company;
(m) make any capital expenditure in excess of (A) the Company’s capital expenditure budget as set forth on Section 5.1(m) of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000;
(n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereof, or as set forth in Section 5.1(n) of the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend any Company Benefit Plan, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practice, provided that the foregoing shall not materially increase the costs or expenses to the Company (including the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any director, or any employee, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) accelerate the payment, funding or vesting of any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations in the ordinary course of business consistent with past practice with respect (which shall include the entry into of new statements of work for Company Material Contracts), (ii) amendments that in the aggregate are not materially adverse to the Company and its Subsidiaries or after the Closing, to Parent Group Member, Parent or their respective Affiliates, or (iii) other extensions or renewals of Company Material Contracts related to Company Leased Real Property in the ordinary course of business;
(l) make any capital expenditure in excess of the Company’s annual capital expenditure budget as disclosed to Parent prior to the date hereof;
(m) except to the extent required by this Agreement, applicable Law, the existing terms of any Company Benefit Plan or Contract: (i) increase the compensation or benefits payable or to become payable to any such person who has employee, officer or will have total consultant with a title of Senior Vice President or above or with annual base compensation salary of less than $200,000 or more; (ii) amend any Company Benefit Plan, or establish, adopt, or enter into any new such arrangement that if in effect on the date hereof would be a Company Benefit Plan (other than employment agreements that would not be required to replace individuals who are terminated be listed on Section 3.11(a) of the Company Disclosure Schedule if in effect on the date hereof); (iii) accelerate the vesting, exercisability or funding under any Company Benefit Plan; or (iv) terminate (other than for “cause” ) the employment of or who voluntarily retire hire or resign)promote any employee, officer or consultant with a title of Senior Vice President or above or with annual salary of $200,000 or more;
(on) (i) enter intoimplement, terminate, modify, adopt or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP Law or by a Governmental EntityGAAP;
(so) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business than those that involve only the payment by the Company or its Subsidiaries, after taking into account amounts paid or payable by insurance, of monetary damages not in excess of $500,000 individually 200,000 individually, in any case, without the imposition of equitable relief on, or $1,500,000 in the aggregate; admission of wrongdoing by, the Company or any of its Subsidiaries or (ii) does not impose any equitable relief or any restriction Proceeding that would materially impact the business of the Company, (iii) does not involve an admission of guilt or liability by the Company, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse relates to the Companytransactions contemplated hereby;
(up) except implement or announce any mass employee layoffs, plant closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that will create a notice obligation or other liability under the ordinary course Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar Law;
(q) enter into any new line of business or in accordance with GAAP, make (that would be material to the extent inconsistent with past practice)Company and its Subsidiaries, taken as a whole;
(r) make or change or revoke any material Tax election, change an annual Tax accounting period, adopt or change any material Tax accounting method, or settle or compromise any material Tax claim, audit or assessment, file any amended Tax Return, file any material Tax Return in a manner inconsistent with past practice, enter into any Tax Sharing Agreement or closing agreement relating to any material Tax, surrender any right to claim a material Tax refund, incur any material Taxes outside the ordinary course of business, or consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment;
(s) abandon, allow to lapse, sell, assign, transfer, grant any security interest in otherwise encumber or dispose of any Company Intellectual Property, or grant any right or license to any Company Intellectual Property other than pursuant to non-exclusive licenses entered into in the ordinary course of business consistent with past practice;
(t) modify any privacy policies of the Company or any of its Subsidiaries or the integrity, security, or operation of the Company’s information technology systems in any adverse manner that would reasonably be expected to be material to the Company and its Subsidiaries, individually or in the aggregate;
(u) engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC;
(v) adopt or implement any stockholder rights plan or similar arrangement;
(w) (i) enter into any collective bargaining agreement or other labor agreement with any labor organization with respect to Employees or (ii) enter into a card-check recognition agreement, neutrality agreement or labor agreement of any kind with respect to any Employees; or
(vx) authorize or enter into any Contract or otherwise agree or make any commitment to do any of the foregoing.
Appears in 2 contracts
Samples: Merger Agreement (Emcore Corp), Merger Agreement (Emcore Corp)
Conduct of Business by the Company Pending the Closing. Between The Company agrees that, from the date of this Agreement and the earlier of to the Effective Time and the termination of this Agreement in accordance with Article 7Time, except (w) as set forth in Section 5.1 of the Company Disclosure Schedulespecifically permitted, (x) as required by applicable Law, (y) as otherwise expressly or contemplated by any other provision of this AgreementAgreement (exclusive of the schedules hereto), as specifically set forth in a closing condition in Article VII or (z) with the Parent's prior written xxxxxxt (such consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will use its commercially reasonable efforts to shall, and shall cause each Company Subsidiary to: (i) conduct its operations in all material respects only in the ordinary course Ordinary Course of business Business, and not to take any action inconsistent therewith or with this Agreement, (ii) use its reasonable best efforts to keep available the services of the current officers, employees and consultants of the Company, (iii) preserve the goodwill of the Company and keep intact its material assets, properties each Company Subsidiary (subject to terminations for cause or performance reasons) and Company Material Contracts and (iv) to preserve the current relationships of the Company and each Company Subsidiary with its material their respective customers, suppliers, distributors, suppliers, Governmental Entities business partners and other Persons with which the Company or any Company Subsidiary has significant business relations, (iii) use its Best Efforts to have in effect and maintain at all times insurance of the kinds, in the amounts and with the insurers as is in effect as of the date of this Agreement, (iv) keep in working condition and good order and repair all of its assets and other properties, normal wear and tear excepted, and (v) protect the Company's Intellectual Property. Without limiting the foregoing, and as an extension thereof, except in accordance with an IOC Exceptionas specifically permitted, required or contemplated by any other provision of this Agreement (exclusive of the schedules hereto), the Company shall not, and shall not between permit any Company Subsidiary to, from the date of this Agreement and the earlier of to the Effective Time and the termination of this Agreement in accordance with Article 7Time, directly or indirectly, take do, or agree to do, any of the following actions:without Parent's prior written consent (such consent not to be unreasonably withheld):
(a) amend its certificate acquire by merging or consolidating with or by purchasing a substantial Equity Interest in or a substantial portion of incorporation the assets of, or bylaws by any other manner, any business, Entity or equivalent organizational documentsdivision thereof other than a Company Subsidiary, or enter into any agreement providing for any merger, consolidation, acquisition, divestiture or similar transaction;
(b) issue, sell, pledgeLease, license or otherwise dispose of, grant, transfer or encumber of any shares of capital stock of, or other Equity Interests in, the Companyits Property, other than in the issuance Ordinary Course of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing termsBusiness;
(c) sell, pledge, dispose of, transfer, lease, guarantee Amend or subject propose to Amend the Organizational Documents of it or any Lien (other than Permitted Liens) any material property or assets of the Company (other than Intellectual Property), except (i) pursuant to existing Contracts or (ii) dispositions of inventory or obsolete assets, in each case, in the ordinary course of businessSubsidiary;
(d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Intellectual Property, except in the ordinary course of business;
(e) declare, set aside, make aside or pay any dividend or other distribution (whether payable in cash, capital stock, property Property or a combination thereof) otherwise with respect to any shares of its capital stock or other Equity Interests;
(f) reclassify, combine, split, subdivide or amend the terms ofstock, or redeempurchase, purchase redeem or otherwise acquire, directly or indirectlyoffer to purchase, redeem or otherwise acquire, any shares of its capital stock stock, other equity Securities, other ownership interests or other any Commitments for any such stock, Securities or interests (except for repurchases of Company Common Shares from former employees pursuant to Repurchase Rights and Company purchases of Equity InterestsInterests of Company Subsidiaries in the Ordinary Course of Business related to intra-company financings);
(ge) merge cause or consolidate the Company with permit any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization Capitalization Adjustments to any Equity Interests of the Company;
(hf) acquire (including by mergerissue, consolidationsell, authorize, or acquisition agree to the issuance or sale of, or enter into any Commitments for, any Equity Interests of stock the Company or assetsany Company Subsidiary, except for (i) any Person the Company Common Shares issuable upon exercise of (A) Company Options outstanding on the date hereof, or assets(B) Company Warrants outstanding on the date hereof, other than and (ii) Company acquisitions of inventory, raw materials and other property Equity Interests of Company Subsidiaries in the ordinary course Ordinary Course of businessBusiness related to intra-company financings;
(g) grant, Amend or change the terms of any Company Options, or accelerate or change the period of exercisability or vesting of any Company Options, or Amend any Repurchase Rights or accelerate or change the period of vesting of any Company Common Shares subject to Repurchase Rights or the lapsing of such Repurchase Rights, or authorize cash payments in exchange for any Company Options;
(i) incur take any indebtedness action with respect to the grant or availability of, qualification for borrowed money or issue increase in any debt securities severance or termination pay to any current or former director, executive officer or employee of the Company or any Company Subsidiary, (ii) execute any employment, deferred compensation or other similar Contract (or any Amendment to any such existing Contract) with any director, executive officer or employee of the Company or any Company Subsidiary (other than immaterial agreements entered into in the Ordinary Course of Business with non-U.S. employees on customary terms), (iii) increase the benefits payable under any existing severance or termination pay policies or employment Contracts, (iv) increase the compensation, bonus or other benefits of current or former directors, executive officers or employees of the Company or any Company Subsidiary, (v) pay any bonuses to employees in excess of the amount set forth in Section 6.1(h) of the Original Company Disclosure Schedules, (vi) adopt or establish any new Company Benefit Plan or Amend any existing Company Benefit Plan, (vii) pay any benefit to a current or former director, executive officer or employee of the Company or any Company Subsidiary not required by any existing Contract or employee benefit plan, or (viii) take any action that would result in the Company or any Company Subsidiary incurring any obligation for any payments or benefits described in clauses (i)-(viii) next preceding except to the extent required in a written contract or agreement in existence as of the date of this Agreement and described in Section 6.1(h) of the Original Company Disclosure Schedules;
(i) hire any employees at the vice president or equivalent level or above, or enter into, Amend or extend the term of, any employment or consulting Contract with any officer, employee, consultant or independent contractor (other than offer letters to new employees using the Company's standard, unmodified form of offer letter Made Available to Parent, which provides for at-will employment and which does not provide for severance, acceleration or post-termination benefits, and statements of work for consultants in the Ordinary Course of Business using the Company's standard, unmodified form Made Available to Parent which provides for not more than 30 days' notice of termination, and does not provide for any severance, acceleration or post-termination benefits or similar payments upon termination), or enter into any collective bargaining agreement (unless required by applicable Law);
(j) make any material changes in its reporting for Taxes or accounting methods or policies; make or rescind any Tax election; make any change to its method or adopt any method of reporting income, deductions, or other Tax items for Tax purposes that is inconsistent with positions taken, elections made or methods used in reporting such Tax items in prior periods (all except as may be required by applicable Law); or settle or compromise any Tax liability;
(k) except as set forth on Section 6.1(k) of the Original Company Disclosure Schedules, commence any legal proceeding, or settle, compromise or otherwise resolve any litigation or other legal proceedings, involving (i) Intellectual Property that is used in the development or distribution of, or that is incorporated into, any of the Company Products or (ii) a payment of more than $25,000 in any one case by or to the Company or any Company Subsidiary;
(l) except as set forth on Section 6.1(l) of the Original Company Disclosure Schedules, (i) incur, or permit or suffer any Company Subsidiary to incur, any Indebtedness other than (A) short-term borrowings incurred in the Ordinary Course of Business not to exceed $100,000 in the aggregate, and (B) borrowings incurred on commercially reasonable terms to refinance Indebtedness existing on the date of this Agreement, in an aggregate principal amount of no more than the principal amount of such refinanced Indebtedness; provided that the Company or the Company Subsidiary, as the case may be, shall be entitled to prepay such Indebtedness without penalty or more than one Business Day advance notice, or (ii) Amend the terms of any existing Indebtedness of the Company or any Company Subsidiary;
(m) assume, guarantee or endorseguarantee, endorse or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise)for, the obligations of any Person other Person, or make any loans or advances, except (i) to or for borrowed moneythe benefit of the Company Subsidiaries in the Ordinary Course of Business, or (ii) for those not in excess of $50,000 in the aggregate;
(jn) create or assume any material Encumbrance on any Property owned by the Company or any Company Subsidiary;
(o) pay or discharge any claims or Liabilities other than the payment in the Ordinary Course of Business of claims or Liabilities that were reflected on the Company Balance Sheet or that were incurred after the date of the Company Balance Sheet in the Ordinary Course of Business;
(p) write off any accounts or notes receivable in excess of $25,000 in the aggregate;
(q) make or commit to make capital expenditures in excess of $25,000 in any three month period after the date of this Agreement;
(i) make any loans or advances to any Person (including any officer, director, employee or consultant of the Company or any Company Subsidiary), other than (A) routine travel advances and sales commission draws to employees of the Company or any Company Subsidiary in the Ordinary Course of Business, and (B) auction or customer advances secured by jewelry or rare coins in the Ordinary Course of Business and on standard terms, or (ii) forgive or discharge in whole or in part any outstanding loans or advances, or otherwise materially Amend any loan or advance previously made other than loans or advances by the Company to any Company Subsidiary in the Ordinary Course of Business related to inter-company financings;
(s) make any investments in, purchase any Securities of or make any capital contributions to any Person, other than a wholly-owned Company Subsidiary;
(t) enter into any Affiliate ContractContract that limits or otherwise restricts the Company or any Company Subsidiary, or that, after the Effective Time, would be reasonably expected to limit or restrict Company or any Company Subsidiary or any of their respective Affiliates or any successors thereto, from engaging or competing in any line of business or in any geographic area, or which provides exclusive rights or "most favored nation" rights of any kind or scope to any party;
(ku) make terminate, Amend or waive any loans, advances or capital contributions toprovision of any standstill agreement to which it is a party, or investments in, any other Person (other than business expenses paid or advanced to or on behalf of directors, officers, employees or independent contractors confidentiality agreement not entered into in the ordinary course Ordinary Course of business)Business, or fail to enforce, to the fullest extent permitted by Law, the provisions of such an agreement;
(lv) terminate, cancel or renew, or agree to Amend in any material amendment to or waiver under respect, any Company Material Contract, or enter into or amend any Contract that, that would have been a Company Material Contract if existing it were in effect on the date hereof, would be a Company Material Contractexcept for agreements with auction houses, distributors and customers on standard forms entered into or Amended in each case other than in the ordinary course its Ordinary Course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract with a customer of the CompanyBusiness;
(mw) intentionally take any action or willfully omit to take any required action that would make any capital expenditure in excess of (A) the Company’s capital expenditure budget as set forth on Section 5.1(m) representation or warranty of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on contained in Article IV or prior in any Related Agreement to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, which it is a signatory inaccurate in the case of each of clause (A) and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000;
(n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereofmaterial respect at, or as set forth in Section 5.1(n) of any time prior to, the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend any Company Benefit Plan, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practice, provided that the foregoing shall not materially increase the costs or expenses to the Company (including the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any directorEffective Time, or any employeefail to cure such action or inaction within thirty (30) days after notice thereof, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) accelerate the payment, funding or vesting of any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations in the ordinary course of business consistent with past practice with respect to any such person who has or will have total annual base compensation of less than $200,000 (other than to replace individuals who are terminated for “cause” or who voluntarily retire or resign);
(o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity;
(s) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business that involve only the payment of monetary damages not in excess of $500,000 individually or $1,500,000 in the aggregate; (ii) does not impose any equitable relief or any restriction that would materially impact the business of the Company, (iii) does not involve an admission of guilt or liability expressly permitted by the Company, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Company;
(u) except in the ordinary course of business or in accordance with GAAP, make (to the extent inconsistent with past practice), change or revoke any material Tax election, adopt or change any material Tax accounting method, or settle or compromise any material Tax claim, audit or assessmentAgreement; or
(vx) authorize take or enter into any Contract or otherwise make any commitment agree to do take any of the actions described in subsections (a)-(w) of this Section 6.1 or which prevents the Company from performing, or causes the Company not to perform, one or more of the covenants required hereunder to be performed by the Company. Notwithstanding the foregoing, to the extent that the Company cannot, despite using its Best Efforts, both comply with the covenants of this Section 6.1 and mandatory provisions of applicable Law, then the Company shall be entitled to take action, or refuse to take action, required by this Section 6.1 without the prior written consent by Parent, provided the Company provides written notice thereof to Parent as promptly as practicable and provided further that this sentence shall not be given effect for purposes of Section 7.2.
Appears in 1 contract
Conduct of Business by the Company Pending the Closing. Between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, except (w) as set forth in Section 5.1 of the Company Disclosure Schedule, (x) as required by applicable Law, (y) Schedule or as otherwise expressly contemplated by any other provision of this AgreementAgreement (including Sections 5.1(a)-(s)), or (z) with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will, and will cause each of its Subsidiaries to, (i) conduct its operations only in the ordinary course of business in a manner consistent with past practice, and (ii) use its commercially reasonable efforts to (i) conduct its operations in all material respects in the ordinary course of business (ii) keep available the services of the current officers, employees and consultants of the Company, (iii) Company and each of its Subsidiaries and to preserve the goodwill of the Company and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current relationships of the Company and each of its Subsidiaries with its material customers, distributors, suppliers, Governmental Entities suppliers and other Persons with which the Company or any of its Subsidiaries has significant business relations. Without limiting the foregoing, except as set forth in accordance with an IOC ExceptionSection 5.1 of the Company Disclosure Schedule or as otherwise expressly contemplated by any other provision of this Agreement, the Company shall not, and shall not permit any of its Subsidiaries to, between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, directly or indirectly, take any of the following actions:actions without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed):
(a) amend its certificate of incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer or encumber any shares of capital stock of, or other Equity Interests in, the CompanyCompany or any of its Subsidiaries of any class, or securities convertible into, or exchangeable or exercisable for, any shares of such capital stock or other Equity Interests, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or other Equity Interests or such convertible or exchangeable securities of the Company or any of its Subsidiaries, other than the issuance of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing terms;
(c) sell, pledge, dispose of, transfer, lease, license, guarantee or subject to encumber any Lien (other than Permitted Liens) any material property or assets (including any product, product segment or business unit) of the Company (other than Intellectual Property)or any of its Subsidiaries, except (i) pursuant to existing Contracts or set forth in the Company Disclosure Schedule, (ii) dispositions the sale, purchase or non-exclusive license of inventory goods (including intangible property) or obsolete assets, in each casethe provision of services, in the ordinary course of businessbusiness consistent with past practice, or (iii) obsolete or worn out equipment;
(d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Material Intellectual Property, except for non-exclusive licenses in the ordinary course of business;
(e) declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock or other Equity Interests, except for dividends paid 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 consistent with past practice;
(f) reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or other Equity Interests, except with respect to any wholly owned Subsidiary of the Company;
(g) merge or consolidate the Company or any of its Subsidiaries with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, except with respect to any wholly owned Subsidiary of the Company;
(h) acquire (including by merger, consolidation, or acquisition of stock or assets) any Person or assets, other than acquisitions of inventory, raw materials and other property in the ordinary course of businessbusiness consistent with past practice;
(i) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations of any Person (other than a wholly-owned Subsidiary of the Company) for borrowed money, except (i) in connection with refinancings of existing indebtedness and (ii) for borrowings under the Company’s Credit Facilities or issuances of commercial paper for working capital and general corporate purposes in the ordinary course of business consistent with past practice;
(j) enter into any Affiliate Contract;
(k) make any loans, advances or capital contributions to, or investments in, any other Person (other than business expenses paid or advanced to or on behalf any wholly-owned Subsidiary of directorsthe Company), officers, employees or independent contractors in excess of $2 million in the ordinary course aggregate;
(k) make any loans or advances to, guarantees for the benefit of, or enter into any other material transaction with any employee of the Company or its Subsidiaries, other than advances for business), travel-related, relocation or other similar expenses in accordance with any currently existing Company policy;
(l) terminate, cancel or renew, or agree to any material amendment to or waiver under any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material Contract, in each case other than in the ordinary course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract business consistent with a customer of the Companypast practice;
(m) make any capital expenditure in excess of (A) the Company’s capital expenditure budget as set forth on attached to Section 5.1(m) of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) and clause (B)Schedule, other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,0002 million;
(n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on as of the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereof, or as set forth in Section 5.1(n) of the Company Disclosure Scheduleotherwise required by applicable Law, (A) establishgrant or provide any severance or termination payments or benefits to any employee of the Company or its Subsidiaries, adoptexcept, terminate in the case of any employee of the Company or materially amend any Company Benefit Planits Subsidiaries who are not Executive Officers, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practicecourse, provided that the foregoing shall not materially increase the costs or expenses to the Company (including the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any director, or any employee, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base the salary, wages, bonusesor bonuses payable to any employee of the Company or its Subsidiaries, incentive except for (1) in the case of employee of the Company or its Subsidiaries who are not Executive Officers and whose annual base compensation or severanceis less than $300,000, retention or similar benefits; (C) accelerate the payment, funding or vesting of any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations increases in the ordinary course of business consistent with past practice and (2) the payment of bonuses or commissions in the ordinary course for completed periods based on actual performance, (C) establish, adopt, amend or terminate any Company Benefit Plan except for amendments to Company Benefit Plans made in the ordinary course of business consistent with past practice that do not materially increase the expense of maintaining such plan, (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 (including, without limitation, with respect to Company Options and Company RSUs), other than to the extent required by such Company Benefit Plan, (E) grant any new awards, or amend or modify the terms of any outstanding awards (including, without limitation, any Company Options and Company RSUs), except an award to any new employee of the Company or any of its Subsidiaries in connection with hiring such employee, (F) change any material actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan that is required by applicable Law to be funded or to change the manner in which contributions to such person plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (G) hire any employee or engage any independent contractor (who has is a natural person) with an annual salary or will have total annual base compensation wage rate or consulting fees in excess of less than $200,000 300,000 (other than employees hired to fill open positions existing as of the date of this Agreement or to replace individuals who are employees whose employment has terminated following the date of this Agreement (provided that if at the time of hiring the overall net increase in employee headcount from the date hereof does not exceed one-hundred (100) persons, no consent of Parent shall be required to hire employees to fill open positions existing as of the date of this Agreement or to replace employees whose employment has terminated following the date of this Agreement) or (H) terminate the employment of any Executive Officer other than for “cause” cause or who voluntarily retire or resign)permanent disability;
(o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity;
(sp) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business consistent with past practice that involve only the payment of monetary damages not in excess of $500,000 7.5 million individually or $1,500,000 15 million in the aggregate; (ii) does not impose , in any case without the imposition of equitable relief on, or the admission of wrongdoing by, the Company or any restriction that would materially impact the business of the Company, (iii) does not involve an admission of guilt or liability by the Company, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Companyits Subsidiaries;
(uq) except in the ordinary course of business or in accordance with GAAP, make (to the extent inconsistent and consistent with past practice), or except as required by applicable Law, (i) make, change or revoke any material Tax election, adopt (ii) change any of its material methods of reporting income or change deductions for Tax purposes, (iii) file any amended Tax return with respect to any material Taxes, (iv) enter into any closing agreement relating to any material Tax, (v) agree to any extension of the statute of limitations in respect of any Tax claim or assessment, (vi) surrender any right to claim a material Tax refund, (vii) prepare any Tax Return in a manner materially inconsistent with past practice, or (viii) settle or compromise any material Tax accounting method, liability or settle or compromise any material Tax claim, audit or assessmentdispute;
(r) Except as permitted by Section 5.1(n), enter into any Contract which (i) would be a Company Material Contract if entered into prior to the date hereof and (ii) contains a change in control or similar provision that would trigger a consent right in favor of the counterparty in connection with the Merger; or
(vs) authorize or enter into any Contract or otherwise make any commitment to do any of the foregoing.
Appears in 1 contract
Samples: Merger Agreement (LogMeIn, Inc.)
Conduct of Business by the Company Pending the Closing. Between Unless Buyer will otherwise agree in writing, the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, except (w) as set forth in Section 5.1 business of the Company Disclosure Schedulewill be conducted, (x) as required by applicable Lawand the directors, (y) as otherwise expressly contemplated by any other provision officers, member or managers of this Agreement, or (z) with each of the prior written consent Company and the Seller will cause the business of Parent (not Company to be unreasonably withheldconducted, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will use its commercially reasonable efforts to (i) conduct its operations in all material respects in the ordinary course and in a manner consistent with past practice and in accordance with applicable law; and each of the Company and the Seller will preserve substantially intact the business (ii) organization of the Company, keep available the services of the current officers, employees employees, and consultants of the Company, (iii) preserve the goodwill of the Company and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current relationships of the Company with its material customers, distributors, suppliers, Governmental Entities and other Persons persons with which the Company has significant business relations. Without limiting the foregoingBy way of amplification and not limitation, except in accordance with an IOC Exceptionas otherwise contemplated by this Agreement, neither the Company shall not nor any of the Seller will, between the date of this Agreement and the earlier time of the Effective Time and the termination of this Agreement in accordance with Article 7Closing, directly or indirectlyindirectly do, take or propose to do, any of the following actions:
(a) without giving Buyer prior written notice of and receiving Buyer's prior written consent: amend its certificate or otherwise change the organizational documents or operating agreement of incorporation or bylaws or equivalent organizational documents;
(b) the Company; issue, sell, pledge, dispose of, grant, transfer encumber or encumber authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock ofof any class of any of the Company, or any options, warrants, convertible securities or other Equity Interests inrights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or (ii) any assets of the Company, other than the issuance of Shares (i) subject to Section 2.4(d), in accordance with the terms of the Company ESPP, (ii) upon the exercise of Company Options or vesting or settlement of Company RSUs or Company PSUs outstanding as of the date hereof or granted in compliance with this Agreement or and in accordance with their respective existing terms;
(c) sell, pledge, dispose of, transfer, lease, guarantee or subject to any Lien (other than Permitted Liens) any material property or assets of the Company (other than Intellectual Property), except (i) pursuant to existing Contracts or (ii) dispositions of inventory or obsolete assets, in each case, in the ordinary course of business;
(d) sell, assign, pledge, transfer, license, abandon, permit to lapse or otherwise dispose of any material Company Owned Intellectual Property, except in the ordinary course of business;
(e) ; declare, set aside, make or pay any dividend or other distribution (whether distribution, payable in cash, stock, stock property or a combination thereof) otherwise, with respect to any of its the Company's capital stock stock, other than as disclosed on Schedule 5.1; provided, however, the Seller will be permitted to take a distribution or other Equity Interests;
(f) dividend of all cash or cash equivalents in the Company provided that such a distribution or dividend does not reduce the Closing Tangible Net Worth of the Company below $0; reclassify, combine, split, subdivide or amend the terms ofsubdivide, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or other Equity Interests;
(g) merge or consolidate the Company with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company's membership interests;
(h) acquire (including by merger, consolidation, or acquisition of stock or assets) any Person or assets, other than acquisitions of inventory, raw materials and other property in the ordinary course of business;
(i) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations of any Person for borrowed money;
(j) enter into any Affiliate Contract;
(k) make any loans, advances or capital contributions to, or investments in, any other Person (other than business expenses paid or advanced to or on behalf of directors, officers, employees or independent contractors in the ordinary course of business);
(l) terminate, cancel or renew, or agree to any material amendment to or waiver under any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material Contract, in each case other than in the ordinary course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract with a customer of the Company;
(m) make any capital expenditure in excess of (A) the Company’s capital expenditure budget as set forth on Section 5.1(m) of the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000;
(n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereof, or as set forth in Section 5.1(n) of the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend any Company Benefit Plan, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practice, provided that the foregoing shall not materially increase the costs or expenses to the Company (including the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any director, or any employee, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) accelerate the payment, funding or vesting of any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations in the ordinary course of business consistent with past practice with respect to any such person who has or will have total annual base compensation of less than $200,000 (other than to replace individuals who are terminated for “cause” or who voluntarily retire or resign);
(o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity;
(s) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business that involve only the payment of monetary damages not in excess of $500,000 individually or $1,500,000 in the aggregate; (ii) does not impose any equitable relief or any restriction that would materially impact the business of the Company, (iii) does not involve an admission of guilt or liability by the Company, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Company;
(u) except in the ordinary course of business or in accordance with GAAP, make (to the extent inconsistent with past practice), change or revoke any material Tax election, adopt or change any material Tax accounting method, or settle or compromise any material Tax claim, audit or assessment; or
(v) authorize or enter into any Contract or otherwise make any commitment to do any of the foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Closing. Between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7The Company agrees that, except (w) as set forth in Section 5.1 of the Company Disclosure Schedule, (x) as required by applicable Law, (y) as otherwise expressly contemplated by any other provision of this Agreement, or (z) with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed) (collectively, the “IOC Exceptions”), the Company will use its commercially reasonable efforts to (i) conduct its operations in all material respects in the ordinary course of business (ii) keep available the services of the current officers, employees and consultants of the Company, (iii) preserve the goodwill of the Company and keep intact its material assets, properties and Company Material Contracts and (iv) preserve the current relationships of the Company with its material customers, distributors, suppliers, Governmental Entities and other Persons with which the Company has significant business relations. Without limiting the foregoing, except in accordance with an IOC Exception, the Company shall not between the date of this Agreement and the earlier of the Effective Time and the date of termination of this Agreement, except in connection with this Agreement or any transaction specifically contemplated hereby, unless Parent shall otherwise agree in accordance writing or except as required by applicable Law, the Company will, and will cause each Company Subsidiary to, (a) conduct its operations in all material respects in the ordinary and usual course of business consistent with Article 7past practice, and (b) keep substantially in working condition and good order and repair all of its material assets and other material properties, normal wear, tear and retirements excepted. Without limiting the foregoing, and as an extension thereof, other than (i) in connection with this Agreement or any transaction specifically contemplated hereby and (ii) as set forth on Section 6.1 of the Company Disclosure Letter, the Company shall not, and shall not permit any Company Subsidiary to, between the date of this Agreement and the earlier of the Effective Time and the date of termination of this Agreement, directly or indirectly, take do, or agree to do, any of the following actionswithout Parent’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), unless required by applicable Law:
(a) amend its certificate acquire by merging or consolidating with or by purchasing a substantial Equity Interest in or a substantial portion of incorporation the assets of, or bylaws by any other manner, any business, corporation, partnership, association or equivalent organizational documentsother business organization or division thereof with a value or purchase price in excess of $100,000, or enter into any agreement providing for any merger, acquisition or similar transaction (other than transfers among the Company and the Company Subsidiaries);
(b) issue, sell, pledgelease, license or otherwise dispose ofof any of its properties or assets, grantother than: (i) dispositions of equipment that is no longer used or useful in the ordinary course of business with a fair market value not in excess of $50,000 in respect of any one asset and not in excess of $100,000 in the aggregate, transfer (ii) sales, leases or encumber other transfers between the Company and the Company Subsidiaries or between those Subsidiaries, and (iii) sales, leases, licenses or dispositions of assets with a fair market value not in excess of $50,000 in respect of any one asset and not in excess of $100,000 in the aggregate;
(c) amend or propose to amend the Company Articles of Incorporation or Company Bylaws or, in the case of the Company Subsidiaries, their respective constituent documents;
(d) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, property or otherwise with respect to any shares of its capital stock, or purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares of its capital stock, other equity securities, other ownership interests or any options, warrants or rights to acquire any such stock, securities or interests;
(e) split, combine or reclassify any outstanding shares of its capital stock of, or other Equity Interests in, the Company, (other than dispositions by or among the issuance Company Subsidiaries and cancellations of Shares (i) subject to Section 2.4(d), Company Options forfeited in accordance with the terms of a Company Benefit Plan in existence on the date of this Agreement or related stock option agreements);
(f) issue, sell, authorize, or agree to the issuance or sale of, any shares of, or any options, warrants or rights of any kind to acquire any shares of, or any securities convertible into or exchangeable for any shares of, any Equity Interests of the Company ESPPor any Company Subsidiary, except for the shares of Company Common Stock issuable upon exercise of (i) Company Options outstanding on the date hereof or (ii) Company Warrants outstanding on the date hereof;
(g) (i) take any action with respect to the grant of or increase in any severance or termination pay to any current or former director, executive officer, or employee of the Company or any Company Subsidiary, (ii) upon execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, executive officer, or employee of the exercise Company or any Company Subsidiary, (iii) increase the benefits payable under any existing severance or termination pay policies or employment agreements, (iv) increase the compensation, bonus or other benefits of current or former director, executive officer, or employee of the Company Options or vesting any Company Subsidiary other than in the ordinary course of business or settlement of Company RSUs (v) adopt or Company PSUs outstanding establish any new employee benefit plan or amend any existing employee benefit plan, except (A) as of may be required by, or in order to facilitate compliance with, Law, or (B) any amendment or arrangement to cause any agreement existing on the date hereof to comply with, or granted in compliance with this Agreement or and in accordance with their respective existing termsbe exempt from, Section 409A of the Internal Revenue Code;
(ch) sellchange any accounting method in respect of Taxes, pledgeexcept as required by GAAP;
(i) incur any Indebtedness (other than (i) capitalized lease obligations permitted by clauses (l) or (n) below, dispose of(ii) obligations to insurance companies in connection with financing of premiums of insurance policies and (iii) borrowing under the Existing Revolving Credit Facility in place on the date hereof) in excess of $100,000 or which may not be prepaid without penalty, transfer, leaseor modify the terms of any existing Indebtedness of the Company or any Company Subsidiary;
(j) assume, guarantee or endorse the obligations of any other Person, or, subject to clause (m) below, make any Lien (other than Permitted Liens) loans, advances, investments in or capital contributions to any material property or assets of the Company (other than Intellectual Property)Person, except (i) pursuant to existing Contracts or for the benefit of the Company Subsidiaries or (ii) dispositions for those not in excess of inventory $100,000 in the aggregate in the ordinary course of business and consistent with past practice;
(k) except pursuant to the terms of any existing Indebtedness of the Company or obsolete assetsany Company Subsidiary, create or assume any material Encumbrance;
(l) other than the approved future capital expenditures of the Company set forth on the Company Disclosure Letter, make or commit to make capital expenditures in each caseexcess of $300,000 in the aggregate after the date of this Agreement;
(m) make any loans or advances (other than routine expense advances and draws to employees of the Company or any Company Subsidiary in the ordinary course of business and consistent with past practice) to any officer, director or employee of the Company, or forgive or discharge in whole or in part any outstanding loans or advances, or otherwise amend, terminate or modify any loan previously granted to any such Person;
(n) amend, terminate prior to its stated term or modify any Company Material Contract, or enter into any Contract granting exclusivity, “most favored nations” or below market pricing rights that involve consideration or other obligation in excess of $100,000 annually;
(o) knowingly take, or agree to commit to take, any action the result of which would be reasonably and foreseeably likely to prevent the consummation of the Merger on or before the Termination Date;
(p) neither collect a receivable nor pay a payable of the Company or any Company Subsidiary outside of the ordinary course of business;
(dq) sell, assign, pledge, transfer, license, abandon, permit fail to lapse maintain inventory or otherwise dispose of any material Company Owned Intellectual Property, except in the equipment at levels consistent with ordinary course of businessbusiness in accordance with the applicable levels of business activities;
(er) declare, set aside, make take or pay fail to take any dividend action that is intended to cause a material default or other distribution an event of default under a Company Material Contract; or
(whether payable in cash, stock, property or a combination thereofs) with respect agree to take any of its capital stock or other Equity Interests;
the actions described in subsections (fa) reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquirethrough (o) of this Section 6.1. Nothing contained in this Agreement shall give Parent, directly or indirectly, any of its capital stock rights to control or other Equity Interests;
(g) merge or consolidate the Company with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company;
(h) acquire (including by merger, consolidation, or acquisition of stock or assets) any Person or assets, other than acquisitions of inventory, raw materials and other property in the ordinary course of business;
(i) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations of any Person for borrowed money;
(j) enter into any Affiliate Contract;
(k) make any loans, advances or capital contributions to, or investments in, any other Person (other than business expenses paid or advanced to or on behalf of directors, officers, employees or independent contractors in the ordinary course of business);
(l) terminate, cancel or renew, or agree to any material amendment to or waiver under any Company Material Contract, or enter into or amend any Contract that, if existing on the date hereof, would be a Company Material Contract, in each case other than in the ordinary course of business; provided, that such Contract does not (x) require the Company to make capital expenditures under such Company Material Contract in excess of $5,000,000 over the term of such Contract or (y) obligates the Company to pay more than $5,000,000 over the term of such Contract, except, in each case, as required under any Contract with a customer of the Company;
(m) make any capital expenditure in excess of (A) direct the Company’s capital expenditure budget as set forth on Section 5.1(m) of operations or otherwise prior to the Effective Time. Prior to the Effective Time, the Company Disclosure Schedule (“2024 Capital Expenditure Budget”) and (B) if the Closing has not occurred on or prior to fiscal year March 31shall exercise, 2025, for the period beginning on April 1, 2025, the Company’s capital expenditure budget consistent with the 2024 Capital Expenditure Budget as adjusted for inflation as measured by the Consumer Price Index published by the U.S. Bureau of Labor Statistics, in the case of each of clause (A) terms and clause (B), other than (i) expenditures made in response to operational emergencies or (ii) capital expenditures that are not, in the aggregate, in excess of $2,500,000;
(n) except as may be required by applicable Laws or pursuant to the terms of any Company Benefit Plan or other contract or agreement in effect on the date conditions of this Agreement or that is permitted to be entered into pursuant to this Agreement after the date hereofAgreement, or as set forth in Section 5.1(n) complete control and supervision of the Company Disclosure Schedule, (A) establish, adopt, terminate or materially amend any Company Benefit Plan, other than renewals of Company Benefit Plans that are health and welfare plans in the ordinary course of business consistent with past practice, provided that the foregoing shall not materially increase the costs or expenses to the Company (including the Parent after the Closing) of sponsoring, maintaining, administering or contributing to such Company Benefit Plan; (B) grant to any director, or any employee, independent contractor, or other individual consultant with total annual base compensation equal to or greater than $200,000, any increase in base salary, wages, bonuses, incentive compensation or severance, retention or similar benefits; (C) accelerate the payment, funding or vesting of any compensation or benefits; (D) except in accordance with GAAP, change any actuarial or other assumption used to calculate funding obligations or liabilities under any Company Benefit Plan; or (E) hire or terminate any officer or employee or any key individual independent contractor or consultant, other than (x) terminations for “cause”, and (y) hirings or terminations in the ordinary course of business consistent with past practice with respect to any such person who has or will have total annual base compensation of less than $200,000 (other than to replace individuals who are terminated for “cause” or who voluntarily retire or resign);
(o) (i) enter into, terminate, modify, or extend any Labor Contract, or (ii) recognize or certify any labor union, works council, or other labor organization or employee representative or group of employees as the bargaining representative for any employee of the Company;
(p) implement or announce any employee layoffs, plant closures, or other personnel actions that requires notice to employees pursuant to the Worker Adjustment and Retraining Act or any similar Law;
(q) waive or release any non-competition, non-solicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or other individual service provider, other than in accordance with applicable Law;
(r) make any change in accounting policies, practices, principles, methods or procedures, other than as required by GAAP or by a Governmental Entity;
(s) enter into any new line of business or wind down any existing line of business or establish a new legal entity or physical presence outside of North America;
(t) except as set forth on Section 5.1(t) of the Company Disclosure Schedule, compromise, settle or agree to settle any Proceeding other than (i) compromises, settlements or agreements in the ordinary course of business that involve only the payment of monetary damages not in excess of $500,000 individually or $1,500,000 in the aggregate; (ii) does not impose any equitable relief or any restriction that would materially impact the business of the Company, (iii) does not involve an admission of guilt or liability by the Company, (iv) does not relate to any litigation by the Company’s stockholders in connection with this Agreement or the Transactions, and (v) is not with respect to a Proceeding in which a Governmental Entity is adverse to the Company;
(u) except in the ordinary course of business or in accordance with GAAP, make (to the extent inconsistent with past practice), change or revoke any material Tax election, adopt or change any material Tax accounting method, or settle or compromise any material Tax claim, audit or assessment; or
(v) authorize or enter into any Contract or otherwise make any commitment to do any of the foregoingits operations.
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