Conduct of Business by the Company Pending the Merger. Except (1) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)), (2) as required by applicable Law, (3) as expressly required by this Agreement or (4) as otherwise set forth in Section 5.1 of the Company Disclosure Letter, during the period from the date hereof until the Effective Time (or such earlier date on which this Agreement may be terminated in accordance with Article VII), the Company shall carry on its business in all material respects in the ordinary course consistent with past practice. To the extent consistent with the foregoing and except as otherwise consented to in writing by Parent, the Company shall use reasonable best efforts to preserve its assets and properties, preserve its business organizations intact, and maintain existing relations and goodwill with Governmental Entities, alliances, customers, suppliers, employees and business associates in all material respects in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, and except as (i) required by applicable Law, (ii) expressly required by this Agreement or (iii) otherwise set forth in Section 5.1 of the Company Disclosure Letter, during such period, the Company shall not, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)): (a) (i) declare, set aside or pay any dividends on, or make other distributions in respect of, any of its capital stock or Equity Interests or (ii) split, combine or reclassify any of its capital stock or Equity Interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or Equity Interests or redeem, purchase or otherwise acquire or offer to redeem any of its capital stock or Equity Interests; (b) authorize for issuance, issue, deliver, sell, pledge, grant, transfer or otherwise encumber any shares of its capital stock or equity interests, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares or interests, voting securities or convertible securities, other than the issuance of Shares pursuant to (i) Company Stock Options outstanding as of the date hereof previously issued under the Company Stock Incentive Plans or (ii) the exchange of Shares for all (but not less than all) exercisable rights under the Rights Plan; (c) amend the articles of incorporation or bylaws of the Company; (d) other than transactions that would be permissible under clause (e) below, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof); (e) make or agree to make any capital expenditure in an amount that exceeds $1,000,000 in the aggregate, other than any capital expenditure contemplated by the Company’s availability model as of the date of this Agreement (a true, complete and correct copy of which has been previously provided to Parent); (f) other than in the ordinary course of business, transfer, assign, sell, lease, license, encumber or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise), or agree to transfer, assign, sell, lease, license, encumber or otherwise dispose of, or engage in any sale-leaseback transaction or agree to any such transaction with respect to, (i) any entity or material assets or (ii) any Owned Real Property; (g) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantee thereof, other than (i) indebtedness incurred in the ordinary course of business and consistent with past practice under the Revolving Credit Agreement and (ii) capital leases incurred after the date hereof in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $250,000 at any one time outstanding; (h) other than in the ordinary course of business (including, for the avoidance of doubt, in connection with a capital expenditure permitted to be made pursuant to Section 5.1(e)), enter into, amend, modify or terminate, or grant any waiver under, any Subject Contract or any Contract that would constitute a Subject Contract if entered into prior to the date hereof (other than the expiration or renewal of any Subject Contract in accordance with its terms); (i) enter into any lease of any real property, except any renewals or replacements of existing leases in the ordinary course of business consistent with past practice; provided, that Parent’s prior written consent will be required with respect to the renewal of any lease (i) listed on Section 5.1 of the Company Disclosure Letter or (ii) with respect to a distribution center or warehouse, such consent not to be unreasonably withheld or delayed with respect to the renewal of any lease listed on Section 5.1 of the Company Disclosure Letter; (j) enter into, amend, modify or terminate, or grant any waiver under, any Related Party Transaction, other than in the ordinary course of business and on terms that as a whole are no less favorable to the Company than terms that would be obtained from an unaffiliated third party; (k) other than in the ordinary course of business, make any loans, advances or capital contributions to, or investments in, any other Person, other than advances to employees (other than the Company’s officers and directors) in respect of travel or other related ordinary expenses or in the ordinary course of business, advances of expenses to officers and directors as permitted by the Company’s bylaws and any indemnification agreements to which the Company is a party or extensions of credit to customers in the ordinary course of business; (l) except as may be required by concurrent changes in GAAP or applicable Law or as disclosed in the Company SEC Documents, make any change in its principles, practices, procedures and methods of financial or Tax accounting that would be material to the Company’s financial statements; (m) merge or consolidate the Company with and into any other Person; (n) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company; (o) settle, release, waive or compromise any pending or threatened Action of or against the Company (i) requiring payment by the Company of an amount in excess of $25,000 in the aggregate, (ii) entailing the incurrence of any material obligation or liability of the Company, including costs or revenue reductions or obligations that would impose material restrictions on the business or operations of the Company, or (iii) that imposes any non-monetary relief that would be material to the Company; (p) other than in the ordinary course of business, enter into any Contract or other binding obligation of the Company containing (i) any material restriction on the right of the Company to conduct its business as it is presently being conducted or currently contemplated to be conducted after the Merger, (ii) any provisions granting “most favored nation” status, in a manner that is material to the business of the Company, or (iii) a non-competition provision restricting the Company in a material manner; (q) (i) increase the compensation (including contingent compensation entitlements, such as severance pay) of any current director, officer, employee or consultant of the Company, except for increases in base salary or wages, annual bonus targets, hourly wage rate and benefits (including in connection with promotions or other changes in job status) for non-officer employees in the ordinary course of business consistent with past practice and in any event not to exceed, in the aggregate, three percent (3%) of any such individual’s total compensation, (ii) adopt any new employee benefit plan or arrangement, or amend, modify or terminate any existing Benefit Plan or Employment Agreement, in each case for the benefit of any current or former director, officer, employee or consultant of the Company, other than (x) to avoid the imposition of any excise tax under Section 4999 of the Code, (y) as required to cause such plans or agreements to not be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to not result in the application of the additional tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder), or (z) as permitted in clause (i) hereof, (iii) enter into any employment, severance, retention, incentive or special pay agreement or arrangement with any employees of the Company, (iv) make any new equity awards to any director, officer, employee or consultant of the Company, (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, compensation or benefits under, any Benefit Plan or Employment Agreement, (vi) enter into any collective bargaining agreements or (vii) hire any (A) employee with an annual base salary in excess of $100,000 or (B) management-level employee with responsibility for selecting and purchasing merchandise for the Company; except, in the case of each of clauses (i) through (vi), to the extent required by applicable Law, applicable Tax qualification requirements, this Agreement, or any Benefit Plan, Employment Agreement or other agreement in effect on the date of this Agreement; (r) (i) make any material Tax election or take any material position on a material Tax Return filed after the date of this Agreement or adopt any material method of accounting therein that is inconsistent with elections made, positions taken or methods of accounting used in preparing or filing similar returns in prior periods, (ii) enter into any settlement or compromise of any material Tax liability, (iii) file any amended Tax Return that would result in a material change in Tax liability, taxable income or loss, (iv) change any annual Tax accounting period, (v) enter into any closing agreement relating to any material Tax liability, or (vi) consent to any waiver of a statute of limitation with respect to any material Tax Return; (s) enter into any new line of business outside of its existing business; (t) other than in the ordinary course of business consistent with past practice, terminate, cancel, amend or modify any material insurance policies maintained by it covering the Company or its properties which is not replaced by a comparable amount of insurance coverage; (u) change fiscal years; or (v) authorize, agree or commit to do any of the foregoing.
Appears in 1 contract
Samples: Merger Agreement (Alco Stores Inc)
Conduct of Business by the Company Pending the Merger. Except (1) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)), (2) as required by applicable Law, (3) as otherwise expressly required contemplated by this Agreement or (4) as otherwise set forth in Section 5.1 of the Company Disclosure Letter, during the period from the date hereof until of this Agreement through the earlier of the time that the change in composition of the Board of Directors of the Company contemplated by Section 7.10 has occurred and the Effective Time (or such earlier date on which this Agreement may be terminated in accordance with Article VII)Time, the Company shall, and shall carry on cause its business Subsidiaries (except with respect to the Company's 50% joint venture with Nagoya Screw Manufacturing Co. Ltd. (the "Joint Venture"), in which case the Company shall use all reasonable efforts to cause the Joint Venture) to, in all material respects carry on their respective businesses in, and not enter into any material transaction other than in accordance with, the regular and ordinary course consistent with past practice. To and, to the extent consistent with the foregoing and except as otherwise consented to in writing by Parenttherewith, the Company shall use its reasonable best efforts to preserve its assets intact their current business organizations, keep available the services of their current officers and properties, employees and preserve its business organizations intact, and maintain existing relations and goodwill their relationships with Governmental Entities, alliances, customers, suppliers, employees suppliers and others having business associates in all material respects in the ordinary course of business consistent dealings with past practicethem. Without limiting the generality of the foregoing, and except as (i) required by applicable Law, (ii) otherwise expressly required contemplated by this Agreement (including the time period specified above) or (iii) otherwise as set forth in Section 5.1 of the Company Disclosure Letter, during such period, the Company shall not, and shall not permit any of its Subsidiaries (except with respect to the Joint Venture, in which case the Company shall use all reasonable efforts to cause the Joint Venture not) to, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion))::
(a) (ix) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock or Equity Interests or (ii) splitstock, combine or reclassify any of its capital stock or Equity Interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or Equity Interests or redeem, purchase or otherwise acquire or offer make any payments to redeem any of its capital stock or Equity Interests;
(b) authorize for issuance, issue, deliver, sell, pledge, grant, transfer or otherwise encumber any shares of its capital stock or equity interests, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares or interests, voting securities or convertible securities, other than the issuance of Shares pursuant to (i) Company Stock Options outstanding as stockholders of the date hereof previously issued under the Company Stock Incentive Plans or (ii) the exchange of Shares for all (but not less than all) exercisable rights under the Rights Plan;
(c) amend the articles of incorporation or bylaws of the Company;
(d) other than transactions that would be permissible under clause (e) below, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof);
(e) make or agree to make any capital expenditure in an amount that exceeds $1,000,000 in the aggregate, other than any capital expenditure contemplated by the Company’s availability model their capacity as of the date of this Agreement (a true, complete and correct copy of which has been previously provided to Parent);
(f) other than in the ordinary course of business, transfer, assign, sell, lease, license, encumber or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise), or agree to transfer, assign, sell, lease, license, encumber or otherwise dispose of, or engage in any sale-leaseback transaction or agree to any such transaction with respect to, (i) any entity or material assets or (ii) any Owned Real Property;
(g) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantee thereofsuch, other than (i1) indebtedness incurred in the ordinary course quarterly dividends of business $.15 per share declared and payable consistent with past practice under the Revolving Credit Agreement and (ii) capital leases incurred after the date hereof in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $250,000 at any one time outstanding;
(h) other than in the ordinary course of business (including, for the avoidance of doubt, in connection with a capital expenditure permitted to be made pursuant to Section 5.1(e)), enter into, amend, modify or terminate, or grant any waiver under, any Subject Contract or any Contract that would constitute a Subject Contract if entered into prior to the date hereof (other than the expiration or renewal of any Subject Contract in accordance with its terms);
(i) enter into any lease of any real property, except any renewals or replacements of existing leases in the ordinary course of business consistent with past practice; provided, that Parent’s prior written consent will be required with respect to the renewal of any lease (i) listed on Section 5.1 of the Company Disclosure Letter or (ii) with respect to a distribution center or warehouse, such consent not to be unreasonably withheld or delayed with respect to the renewal of any lease listed on Section 5.1 of the Company Disclosure Letter;
(j) enter into, amend, modify or terminate, or grant any waiver under, any Related Party Transaction, other than in the ordinary course of business and on terms that as a whole are no less favorable to the Company than terms that would be obtained from an unaffiliated third party;
(k) other than in the ordinary course of business, make any loans, advances or capital contributions to, or investments in, any other Person, other than advances to employees (other than the Company’s officers and directors) in respect of travel or other related ordinary expenses or in the ordinary course of business, advances of expenses to officers and directors as permitted by the Company’s bylaws and any indemnification agreements to which the Company is a party or extensions of credit to customers in the ordinary course of business;
(l) except as may be required by concurrent changes in GAAP or applicable Law or as disclosed in the Company SEC Documents, make any change in its principles, practices, procedures and methods of financial or Tax accounting that would be material to the Company’s financial statements;
(m) merge or consolidate the Company with and into any other Person;
(n) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company;
(o) settle, release, waive or compromise any pending or threatened Action of or against the Company (i) requiring payment by the Company of an amount in excess of $25,000 in the aggregate, (ii) entailing the incurrence of any material obligation or liability of the Company, including costs or revenue reductions or obligations that would impose material restrictions on the business or operations of the Company, or (iii) that imposes any non-monetary relief that would be material to the Company;
(p) other than in the ordinary course of business, enter into any Contract or other binding obligation of the Company containing (i) any material restriction on the right of the Company to conduct its business as it is presently being conducted or currently contemplated to be conducted after the Merger, (ii) any provisions granting “most favored nation” status, in a manner that is material to the business of the Company, or (iii) a non-competition provision restricting the Company in a material manner;
(q) (i) increase the compensation (including contingent compensation entitlements, such as severance pay) of any current director, officer, employee or consultant of the Company, except for increases in base salary or wages, annual bonus targets, hourly wage rate and benefits (including in connection with promotions or other changes in job status) for non-officer employees in the ordinary course of business consistent with past practice and in any event not to exceed, in the aggregate, three percent (3%) of any such individual’s total compensation, (ii) adopt any new employee benefit plan or arrangement, or amend, modify or terminate any existing Benefit Plan or Employment Agreement, in each case for the benefit of any current or former director, officer, employee or consultant of the Company, other than (x) to avoid the imposition of any excise tax under Section 4999 of the Code, (y) as required to cause such plans or agreements to not be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to not result in the application of the additional tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder), or (z) as permitted in clause (i) hereof, (iii) enter into any employment, severance, retention, incentive or special pay agreement or arrangement with any employees of the Company, (iv) make any new equity awards to any director, officer, employee or consultant of the Company, (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, compensation or benefits under, any Benefit Plan or Employment Agreement, (vi) enter into any collective bargaining agreements or (vii) hire any (A) employee with an annual base salary in excess of $100,000 or (B) management-level employee with responsibility for selecting and purchasing merchandise for the Company; except, in the case of each of clauses (i) through (vi), to the extent required by applicable Law, applicable Tax qualification requirements, this Agreement, or any Benefit Plan, Employment Agreement or other agreement in effect on the date of this Agreement;
(r) (i) make any material Tax election or take any material position on a material Tax Return filed after the date of this Agreement or adopt any material method of accounting therein that is inconsistent with elections made, positions taken or methods of accounting used in preparing or filing similar returns in prior periods, (ii) enter into any settlement or compromise of any material Tax liability, (iii) file any amended Tax Return that would result in a material change in Tax liability, taxable income or loss, (iv) change any annual Tax accounting period, (v) enter into any closing agreement relating to any material Tax liability, or (vi) consent to any waiver of a statute of limitation with respect to any material Tax Return;
(s) enter into any new line of business outside of its existing business;
(t) other than in the ordinary course of business consistent with past practice, terminate, cancel, amend or modify any material insurance policies maintained by it covering the Company or its properties which is not replaced by a comparable amount of insurance coverage;
(u) change fiscal years; or
(v) authorize, agree or commit to do any of the foregoing.practices and
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except (1) During the period from the date of this Agreement through the earlier of the Closing and the termination of this Agreement, except as otherwise expressly contemplated or permitted by this Agreement, as set forth in Section 6.01 of the Company Disclosure Letter, as required by applicable Law or Order, or with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned delayed or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)), (2) as required by applicable Law, (3) as expressly required by this Agreement or (4) as otherwise set forth in Section 5.1 of the Company Disclosure Letter, during the period from the date hereof until the Effective Time (or such earlier date on which this Agreement may be terminated in accordance with Article VIIconditioned), the Company (x) shall carry on and shall cause each of its business in all material respects in the ordinary course consistent with past practice. To the extent consistent with the foregoing Subsidiaries
(1) to conduct their respective businesses and except as otherwise consented to in writing by Parent, the Company shall use reasonable best efforts to preserve its assets and properties, preserve its business organizations intact, and maintain existing relations and goodwill with Governmental Entities, alliances, customers, suppliers, employees and business associates in all material respects operations in the ordinary course of business in all material respects and (2) to the extent consistent with past practice. Without limiting subsection (1), to use commercially reasonable efforts to preserve intact its business organization and, its assets, keep available the generality services of the foregoingits current officers, employees and except as consultants and preserve its goodwill and its relationships with customers, reinsurers, agents, service providers and others having business dealings with it and (iy) required shall not and shall cause each of its Subsidiaries not to (it being understood that no action by applicable Law, (ii) expressly required by this Agreement or (iii) otherwise set forth in Section 5.1 of the Company Disclosure Letter, during such period, the Company shall not, without the prior written consent or any of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except its Subsidiaries with respect to Sections 5.1(athe matters specifically addressed by any provision of this subsection (y) and 5.1(b), for which consent may below shall be withheld in Parent’s sole discretiondeemed to be a breach of subsection (x)):
(a) (i) declare, set aside aside, make or pay any dividends on, or make other distributions (whether in cash, stock or property) in respect of, of any of its or its Subsidiaries' capital stock or Equity Interests other equity securities, other than (i) any dividends or distributions by a Subsidiary of the Company to the Company or to any other Subsidiary of the Company or (ii) quarterly cash dividends paid by the Company on the Company Common Stock not in excess of $0.06 per share, per quarter, with record and payment dates generally consistent with the timing of record and payment dates in the most recent comparable fiscal quarter prior to the date of this Agreement;
(b) subdivide, adjust, split, combine or reclassify any of its or its Subsidiaries' capital stock or Equity Interests other equity securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of for, its or its Subsidiaries' capital stock or Equity Interests or redeemother equity securities;
(c) repurchase, purchase redeem or otherwise acquire or offer to repurchase, redeem any of its capital stock or Equity Interests;
(b) authorize for issuance, issue, deliver, sell, pledge, grant, transfer or otherwise encumber acquire, directly or indirectly, any shares of its or its Subsidiaries' capital stock or other equity interestssecurities, Company Stock Rights or Subsidiary Stock Rights;
(d) issue, offer, grant, deliver or sell any shares of its or its Subsidiaries' capital stock or other voting securities equity securities, Company Stock Rights or any securities convertible into, or any rights, warrants or options to acquire, any such shares or interests, voting securities or convertible securitiesSubsidiary Stock Rights, other than the issuance of Shares pursuant to (i) shares of Company Common Stock upon the vesting or exercise of Company Stock Options or Company Restricted Stock outstanding as of the date hereof previously issued under in accordance with the Company Stock Incentive Plans or (ii) the exchange of Shares for all (but not less than all) exercisable rights under the Rights Plan;
(c) amend the articles of incorporation or bylaws terms thereof as of the Company;
(d) other than transactions that would be permissible under clause (e) below, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof)date hereof;
(e) make amend the Company Certificate of Incorporation or agree to make any capital expenditure in an amount that exceeds $1,000,000 in the aggregate, other than any capital expenditure contemplated by Company Bylaws or equivalent organizational documents of the Company’s availability model as of the date of this Agreement (a true, complete and correct copy of which has been previously provided to Parent)'s Subsidiaries;
(f) purchase an equity interest in, or a portion of the assets of, any Person or any division or business thereof, or merge, combine or consolidate with or engage in any other similar transaction with any Person, in each case, other than (i) any such action solely between or among the Company and its wholly-owned Subsidiaries, (ii) acquisitions of assets with consideration not to exceed $5,000,000 in the aggregate or (iii) investment portfolio transactions not in violation of the Investment Guidelines;
(g) sell, lease, license, allow to lapse, abandon, mortgage, encumber or otherwise dispose of any of its properties or assets (including capital stock or equity securities of any Subsidiary of the Company), other than (i) solely between or among the Company and its wholly-owned Subsidiaries or solely between or among two or more wholly-owned Subsidiaries of the Company, (ii) investment portfolio transactions not in violation of the Investment Guidelines, (iii) nonexclusive licenses of Intellectual Property in the ordinary course of business, transfer, assign, sell, lease, license, encumber (iv) sales or otherwise dispose other dispositions of (by merger, consolidation, sale other assets in the ordinary course of stock or assets or otherwise), or agree to transfer, assign, sell, lease, license, encumber or otherwise dispose of, or engage in any sale-leaseback transaction or agree to any such transaction business materially consistent with respect to, (i) any entity or material assets past practice or (iiv) any Owned Real Propertysales of assets with a value not in excess of $1,000,000 individually or $5,000,000 in the aggregate;
(gh) create, incur, assume, suffer to exist create or otherwise be liable with respect to assume any indebtedness for borrowed money money, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee thereofany such indebtedness or any debt securities of another Person, or enter into any "keep well" or other agreement to maintain any financial statement condition of another Person (collectively, "Indebtedness"), other than (i) indebtedness Indebtedness incurred in the ordinary course of business and consistent with past practice (including under the Revolving Credit Agreement Company's credit facilities and any trade letters of credit existing on the date hereof) not in excess of $5,000,000, provided that the terms of any such Indebtedness permits its repayment at any time without penalty, (ii) capital leases Indebtedness incurred after to refinance any Indebtedness existing on the date hereof in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $250,000 at any one time outstanding;
(h) other than in the ordinary course of business (including, for the avoidance of doubt, in connection with a capital expenditure this Agreement or permitted to be made pursuant to Section 5.1(e))incurred, enter into, amend, modify assumed or terminate, or grant any waiver under, any Subject Contract or any Contract that would constitute a Subject Contract if otherwise entered into prior hereunder, in each case provided the terms of such Indebtedness are not materially less favorable to the date hereof (other Company and Parent than the expiration Indebtedness that is being repaid or renewal (iii) guarantees by the Company of any Subject Contract in accordance with Indebtedness of its terms)wholly-owned Subsidiaries or guarantees by the Subsidiaries of Indebtedness of the Company;
(i) enter into make any lease of loans to any real propertyPerson, except any renewals or replacements of existing leases in the ordinary course of business consistent with past practice; provided, that Parent’s prior written consent will be required with respect to the renewal of any lease other than (i) listed on Section 5.1 of to the Company Disclosure Letter or any of its wholly-owned Subsidiaries or (ii) with respect to a distribution center or warehouse, such consent investment portfolio transactions not to be unreasonably withheld or delayed with respect to the renewal of any lease listed on Section 5.1 in violation of the Company Disclosure LetterInvestment Guidelines;
(j) enter intosettle, amend, modify waive or terminatedischarge any material Action made or pending against the Company or any of its Subsidiaries, or grant any waiver underof their respective directors or officers in their capacities as such, or waive any Related Party Transactionclaims of material value, other than in any settlement, waiver or discharge (i)(A) that is for an amount not to exceed, for any such settlement individually, $2,000,000 (net of the ordinary course of business and on terms that as a whole are no less favorable to amount reserved for such matters by the Company than terms or amounts covered by insurance) and (B) that would not reasonably be obtained expected to prohibit or materially restrict or materially impair the Company and its Subsidiaries from operating their business in substantially the same manner as operated on the date of this Agreement or (ii) for an unaffiliated third partyamount that is fully reinsured by any reinsurer;
(k) other than in the ordinary course of business, make any loansmaterial change (i) in any accounting methods, advances principles or capital contributions topractices, (ii) to the investment policies and guidelines of the Company or investments inany of its Subsidiaries or (iii) to any of the actuarial, underwriting, claims administration or reinsurance policies, practices or principles of any other PersonCompany Insurance Subsidiary, in each case, other than advances to employees (other than the Company’s officers and directors) as required by changes in respect of travel or other related ordinary expenses GAAP or in the ordinary course of business, advances of expenses to officers and directors as SAP prescribed or permitted by the Company’s bylaws applicable insurance regulatory authorities and any indemnification agreements to which accounting pronouncements by the Company is a party or extensions SEC, the National Association of credit to customers in Insurance Commissioners and the ordinary course of businessFinancial Accounting Standards Board;
(l) except as may be required by concurrent changes in GAAP or applicable Law or a Benefit Plan as disclosed of the date hereof, (i) grant any increases in the Company SEC Documents, make compensation of or benefits to any change of its directors or officers or (ii) grant any material increases in the compensation of or benefits to any of its principles, practices, procedures and methods of financial or Tax accounting that would be material to the Company’s financial statementsemployees;
(m) merge or consolidate except as required by a Benefit Plan as of the Company with and date hereof, (i) enter into any employment agreements with any officer, (ii) make any grant of (other Personthan de minimis grants), or increase (other than de minimis increases), any severance, change in control, termination or similar compensation or benefits payable to any director, officer or employee, (iii) accelerate the time of payment or vesting of, or the lapsing of material restrictions with respect to, or fund or otherwise secure the payment of, any material compensation or material benefits under any Benefit Plan or (iv) enter into or amend to increase in any material respect the benefits under any Benefit Plan (or any plan, program, agreement or arrangement that would constitute a Benefit Plan if in effect on the date hereof);
(ni) prepare or file any material Tax Return inconsistent with past practice or, on any such material Tax Return, take any material position, make, revoke or change any material Tax election, or adopt any Tax accounting method that is materially inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods, (ii) settle or compromise any material Tax liability, or enter into any closing agreement or similar arrangement with respect to a material amount of Taxes, in each case, that is materially inconsistent with past practice, (iii) file any material amended Tax Return or (iv) surrender any right to claim a material Tax refund, offset or other reduction in Tax liability;
(o) enter into any Contract that if in effect on the date hereof would be a Material Contract or modify, terminate, renew or amend in any material respect any Material Contract, in each case, other than (i) the entry into Contracts in the ordinary course of business that would not be considered Material Contracts under clause (ii), (iii), (v) or (vii) of Section 4.10(a) and (ii) any modification, termination, renewal or amendment of any Material Contract in the ordinary course of business that is not materially adverse to the Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole;
(p) enter into or amend, modify or waive any rights under any Related Party Agreement, in each case to the extent that doing so would reasonably be expected to result in a material incremental cost to Parent, the Company or any of its Subsidiaries or otherwise be materially adverse to Parent, the Company or any of its Subsidiaries;
(q) adopt any plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company;
(o) settle, release, waive or compromise any pending or threatened Action of or against the Company (i) requiring payment by the Company of an amount in excess of $25,000 in the aggregate, (ii) entailing the incurrence of any material obligation or liability of the Company, including costs or revenue reductions or obligations that would impose material restrictions on the business or operations of the Company, or (iii) that imposes any non-monetary relief that would be material to the Company;
(p) other than in the ordinary course of business, enter into any Contract or other binding obligation of the Company containing (i) any material restriction on the right of the Company to conduct its business as it is presently being conducted or currently contemplated to be conducted after the Merger, (ii) any provisions granting “most favored nation” status, in a manner that is material to the business of the Company, or (iii) a non-competition provision restricting the Company in a material manner;
(q) (i) increase the compensation (including contingent compensation entitlements, such as severance pay) of any current director, officer, employee or consultant of the Company, except for increases in base salary or wages, annual bonus targets, hourly wage rate and benefits (including in connection with promotions or other changes in job status) for non-officer employees in the ordinary course of business consistent with past practice and in any event not to exceed, in the aggregate, three percent (3%) of any such individual’s total compensation, (ii) adopt any new employee benefit plan or arrangement, or amend, modify or terminate any existing Benefit Plan or Employment Agreement, in each case for the benefit of any current or former director, officer, employee or consultant of the Companyreorganization, other than (x) to avoid the imposition of any excise tax under Section 4999 of the Code, (y) as required to cause such plans or agreements to not be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to not result in the application of the additional tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder), or (z) as permitted in clause (i) hereof, (iii) enter into any employment, severance, retention, incentive or special pay agreement or arrangement with any employees of the Company, (iv) make any new equity awards to any director, officer, employee or consultant of the Company, (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, compensation or benefits under, any Benefit Plan or Employment Agreement, (vi) enter into any collective bargaining agreements or (vii) hire any (A) employee with an annual base salary in excess of $100,000 or (B) management-level employee with responsibility for selecting and purchasing merchandise for the Company; exceptthan, in the case of each any Subsidiary of clauses (i) through (vi)the Company, that is not material to the extent required by applicable LawCompany and its Subsidiaries, applicable Tax qualification requirements, this Agreement, or any Benefit Plan, Employment Agreement or other agreement in effect on the date of this Agreementtaken as a whole;
(r) (i) make materially modify or amend any material Tax election CUMIS Material Contract other than any modification or take amendment of any material position on a material Tax Return filed after the date of this Agreement or adopt any material method of accounting therein CUMIS Material Contract that is inconsistent with elections madenot materially adverse to the Lender Services Business or Parent and its Subsidiaries, positions taken or methods of accounting used in preparing or filing similar returns in prior periods, (ii) enter into any settlement or compromise of any material Tax liability, (iii) file any amended Tax Return that would result in as a material change in Tax liability, taxable income or loss, (iv) change any annual Tax accounting period, (v) enter into any closing agreement relating to any material Tax liability, or (vi) consent to any waiver of a statute of limitation with respect to any material Tax Return;whole; or
(s) enter into any new line of business outside of its existing business;
(t) other than in the ordinary course of business consistent with past practice, terminate, cancel, amend or modify any material insurance policies maintained by it covering the Company or its properties which is not replaced by a comparable amount of insurance coverage;
(u) change fiscal years; or
(v) authorize, agree or commit to do take any of the foregoingactions described in this Section 6.01.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) Except (1) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)), (2) as required by applicable Law, (3) as expressly required by this Agreement or (4) as otherwise matters set forth in Section 5.1 5.1(a) of the Company Disclosure Letter or otherwise expressly permitted by this Agreement, from the date of this Agreement to the Closing Date (the “Pre-Closing Period”), the Company shall, and shall cause each of its Subsidiaries to, conduct its business in the usual, regular and ordinary course in substantially the same manner as previously conducted, to pay its debts, file its Tax Returns and pay its Taxes, in each case when due (taking into account any applicable extensions), to continue to make maintenance capital expenditures to the extent set forth in Section 5.1(a) of the Company Disclosure Letter, during the period from the date hereof until the Effective Time (or such earlier date on which this Agreement may be terminated in accordance with Article VII), the Company shall carry on to market and promote its business in all material respects in the ordinary course of business consistent with past practice. To the extent consistent with the foregoing practices and except as otherwise consented to in writing by Parent, the Company shall use its commercially reasonable best efforts to preserve its current business organization, assets and propertiestechnology, preserve keep available the services of its business organizations intactcurrent officers and employees and keep its relationships with customers, and maintain existing relations and goodwill with Governmental Entities, alliances, customerscollaborators, suppliers, employees licensors, licensees, distributors and others having business associates dealings with them. In addition, and without limiting the generality of the foregoing, except for matters set forth in all material respects Section 5.1(a) of the Company Disclosure Letter or otherwise contemplated by this Agreement, during the Pre-Closing Period, Company shall not, and shall not permit any of its Subsidiaries to, do any of the following without the prior written consent of Buyer and Sub:
(i) amend its Restated Certificate or Restated Bylaws or similar organizational documents or change the number of directors constituting its entire board of directors;
(ii) (I)(A) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock or other equity interests, except that (1) the Company shall be permitted to pay dividends to the holders of Preferred Stock in accordance with the Company’s Certificate of Incorporation (provided, however, that such dividends shall be paid solely in cash if so requested in writing by Buyer), and (2) a wholly owned Subsidiary of Company may declare and pay a dividend or make advances to its parent or Company or (B) redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or other securities; (II) issue, sell, pledge, dispose of or encumber any (A) additional shares of its capital stock or other equity interests, (B) securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock or other equity interests, or (C) of its other securities, other than shares of Company Common Stock or Company Preferred Stock issued upon the exercise of any Options, Warrants or Company Preferred Stock outstanding on the date hereof in accordance with the terms thereof, as the case may be, as in effect on the date hereof; or (III) split, combine or reclassify any of its outstanding capital stock or other equity interests or amend the terms of any rights, warrants or options to acquire its capital stock or other securities;
(iii) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof (including entities which are Subsidiaries) or (B) any assets, including real estate, in an amount exceeding $5,000 individually or $25,000 in the aggregate, except purchases of assets, including without limitation, inventory, equipment and supplies in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, and except as (i) required by applicable Law, (ii) expressly required by this Agreement or (iii) otherwise set forth in Section 5.1 of the Company Disclosure Letter, during such period, the Company shall not, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)):
(a) (i) declare, set aside or pay any dividends on, or make other distributions in respect of, any of its capital stock or Equity Interests or (ii) split, combine or reclassify any of its capital stock or Equity Interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or Equity Interests or redeem, purchase or otherwise acquire or offer to redeem any of its capital stock or Equity Interests;
(biv) authorize for issuance, issue, deliver, sell, pledge, grant, transfer or otherwise encumber any shares of its capital stock or equity interests, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares or interests, voting securities or convertible securities, other than the issuance of Shares pursuant to (iA) Company Stock Options outstanding as of the date hereof previously issued under the Company Stock Incentive Plans or (ii) the exchange of Shares for all (but not less than all) exercisable rights under the Rights Plan;
(c) amend the articles of incorporation or bylaws of the Company;
(d) other than transactions that would be permissible under clause (e) below, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof);
(e) make or agree to make any capital expenditure in an amount that exceeds $1,000,000 in the aggregate, other than any capital expenditure contemplated by the Company’s availability model as of the date of this Agreement (a true, complete and correct copy of which has been previously provided to Parent);
(f) other than in the ordinary course of business, transfer, assign, sell, lease, license, encumber or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise), or agree to transfer, assign, sell, lease, license, encumber or otherwise dispose of, or engage in any sale-leaseback transaction or agree to any such transaction with respect to, (i) any entity or material assets or (ii) any Owned Real Property;
(g) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantee thereof, rights other than (i1) indebtedness incurred in the ordinary course of business products and consistent with past practice under the Revolving Credit Agreement and (ii) capital leases incurred after the date hereof in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $250,000 at any one time outstanding;
(h) other than in the ordinary course of business (including, for the avoidance of doubt, in connection with a capital expenditure permitted to be made pursuant to Section 5.1(e)), enter into, amend, modify or terminate, or grant any waiver under, any Subject Contract or any Contract that would constitute a Subject Contract if entered into prior to the date hereof (other than the expiration or renewal of any Subject Contract in accordance with its terms);
(i) enter into any lease of any real property, except any renewals or replacements of existing leases inventory in the ordinary course of business consistent with past practice; provided, (2) equipment and property no longer used in the operation of the Company’s business, or (3) assets related to discontinued operations or (B) grant or suffer any Liens other than Permitted Liens on any of their assets or rights other than in the ordinary course of business consistent with past practice;
(v) (A) amend, modify or terminate any Company Material Contract, waive, release or assign any material rights, claims or benefits thereunder or enter into any new Contract which would be a Company Material Contract, (B) amend, modify or terminate any Contract with a material manufacturer or supplier of materials, components or services for Xyrem, Antizol and Cystadane products or components, or waive, release or assign any material rights, claims or benefits thereunder, (C) enter into any new Contract with any Person (other than the FDA) with regards to or relating to Xyrem, (D) make any agreements with the FDA concerning Xyrem, provided that ParentBuyer’s prior written consent will be required with respect to the renewal of foregoing shall not be unreasonably withheld, or (E) sell, transfer or license to any lease (i) listed on Section 5.1 Person or otherwise extend, amend, or modify any rights to the Intellectual Property Rights of the Company Disclosure Letter or (ii) with respect to a distribution center or warehouse, such consent not to be unreasonably withheld or delayed with respect to the renewal of any lease listed on Section 5.1 of the Company Disclosure Letterits Subsidiaries;
(jvi) (A) enter into any employment or severance agreement with or grant any severance or termination pay to any officer, director or employee of Company or any Subsidiary of the Company; or (B) hire or agree to hire any new or additional employees or executive officers;
(vii) except as required to comply with applicable Law or as required by the terms of this Agreement, (A) adopt, enter into, amend, modify or terminate, amend or grant increase the amount or accelerate the payment or vesting of any waiver underbenefit or award or amount payable under any Company Benefit Plan or other arrangement for the current or future benefit or welfare of any director, executive officer or current or former employee, (B) increase in any manner the compensation or fringe benefits of, or pay any bonus to, any Related Party Transactiondirector, officer or, other than in the ordinary course of business and on terms that as a whole are no less favorable to consistent with past practice, employee, (C) pay any benefit not provided for under any Company Benefit Plan or adopt any new Company Benefit Plan or benefit, (D) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Company Benefit Plan (including the grant of stock options except for grants set forth in Section 5.1(a)(vii) of the Company than terms that would be obtained from an unaffiliated third partyDisclosure Letter), stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any Company Benefit Plans or agreements or awards made thereunder) or (E) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract, arrangement or Company Benefit Plan;
(kviii) (A) incur or assume any indebtedness for borrowed money (whether long-term or short-term); (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other than in the ordinary course of business, Person; (C) make any loans, advances or capital contributions to, or investments in, any other Person, Person (other than to wholly owned Subsidiaries or customary loans or advances to employees (other than the Company’s officers and directors) in respect of for travel or other related ordinary similar business expenses in accordance with past practice in an amount not exceeding $10,000 individually or $50,000 in the ordinary course of business, advances of expenses to officers and directors as permitted by the Company’s bylaws and any indemnification agreements to which the Company is a party aggregate); or extensions of credit to customers in the ordinary course of business;
(lD) except as may be required by concurrent changes in GAAP or applicable Law or as disclosed in the Company SEC Documents, make any change in its principles, practices, procedures and methods of financial or Tax accounting that would be material to the Company’s financial statements;
(m) merge or consolidate the Company with and into any other Person;
(n) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company;
(o) settle, release, waive settle or compromise any pending claim, litigation or threatened Action of or against the Company (i) requiring payment by the Company of an amount in excess of $25,000 in the aggregate, (ii) entailing the incurrence of any material obligation or liability of the Company, including costs or revenue reductions or obligations that would impose material restrictions on the business or operations of the Company, or (iii) that imposes any non-monetary relief that would be material to the Company;
(p) other legal proceeding other than in the ordinary course of business, enter into in accordance with past practice, and without admission of liability or pay, discharge or satisfy any Contract other claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other binding obligation than the payment, discharge or satisfaction of any such other claims, liabilities or obligations for the Company containing (i) any material restriction on amounts reserved against in the right of the Company to conduct its business as it is presently being conducted or currently contemplated to be conducted after the Merger, (ii) any provisions granting “most favored nation” status, in a manner that is material to the business consolidated financial statements of the Company, or (iii) a non-competition provision restricting the Company in a material manner;
(qix) (i) increase the compensation (including contingent compensation entitlements, such as severance pay) of change any current director, officer, employee accounting method used by it unless required by GAAP or consultant of the Company, except for increases in base salary or wages, annual bonus targets, hourly wage rate and benefits (including in connection with promotions or other changes in job status) for non-officer employees in the ordinary course of business consistent with past practice and in any event not to exceed, in the aggregate, three percent (3%) of any such individual’s total compensation, (ii) adopt any new employee benefit plan or arrangement, or amend, modify or terminate any existing Benefit Plan or Employment Agreement, in each case for the benefit of any current or former director, officer, employee or consultant of the Company, other than by applicable Law;
(x) to avoid the imposition of any excise tax under Section 4999 of the Code, (y) as required to cause such plans or agreements to not be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to not result in the application of the additional tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder), or (z) as permitted in clause (i) hereof, (iii) enter into any employment, severance, retention, incentive or special pay agreement or arrangement with any employees of the Company, (iv) make any new equity awards to any director, officer, employee or consultant of the Company, (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, compensation or benefits under, any Benefit Plan or Employment Agreement, (vi) enter into any collective bargaining agreements or (vii) hire any (A) employee with an annual base salary in excess of $100,000 or (B) management-level employee with responsibility for selecting and purchasing merchandise for the Company; except, in the case of each of clauses (i) through (vi), to the extent required by applicable Law, applicable Tax qualification requirements, this Agreement, or any Benefit Plan, Employment Agreement or other agreement in effect on the date of this Agreement;
(r) (i) make any material Tax election or take any material position on a material Tax Return filed after the date of this Agreement or adopt any material method of accounting therein that is inconsistent with elections made, positions taken or methods of accounting used in preparing or filing similar returns in prior periods, (ii) enter into any settlement settle or compromise of any material Tax liability, (iiiB) file amend any amended material Tax Return that would result in a material change in Tax liability, taxable income or lossreturn, (iv) change any annual Tax accounting period, (vC) enter into or modify any closing material agreement relating to Taxes, (D) make or change any material Tax liabilityelection, (E) surrender any right to claim a refund of Taxes, or (viF) consent to any extension or waiver of a statute of the limitation with respect period applicable to any material Tax Returnclaim or assessment;
(sxi) revalue any assets of the Company, except as required by GAAP or by applicable Law;
(xii) enter into any new line of business outside or enter into any Contract that restrains, limits or impedes the Company’s or any of its existing Subsidiaries’ ability to compete with or conduct any business or line of business;
(txiii) other than in take any action such that (A) the ordinary course aggregate cash and cash equivalents of business consistent with past practice, terminate, cancel, amend or modify any material insurance policies maintained by it covering the Company and its Subsidiaries on a consolidated basis that would appear on a consolidated balance sheet of the Company prepared in accordance with GAAP as of the Closing Date would be an amount less than $3,000,000 if the Closing Date is on or prior to June 30, 2005 or (B) net current assets on the Closing Date would be less than $1,000,000 (and if the Closing does not occur by June 30, 2005, Buyer and the Company agree to work together in good faith to address the cash requirements of the Company and its properties which is not replaced by a comparable amount of insurance coverageSubsidiaries);
(uxiv) change fiscal yearstake or omit to take any action which would make any of the representations or warranties of the Company contained in this Agreement untrue and incorrect in any material respect as of the date when made if such action had then been taken or omitted, or which would reasonably be expected to result in any of the conditions set forth in Article VI hereof not being satisfied; or
(vxv) authorize, agree or commit enter into an agreement to do any of the foregoing, or to authorize any of the foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) Except (1) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)), (2) as required by applicable Law, (3) as expressly required by this Agreement or (4) as otherwise matters set forth in Section 5.1 5.1(a) of the Company Disclosure Letter or otherwise expressly permitted by this Agreement, from the date of this Agreement to the Closing Date (the “Pre-Closing Period“), the Company shall, and shall cause each of its Subsidiaries to, conduct its business in the usual, regular and ordinary course in substantially the same manner as previously conducted, to pay its debts, file its Tax Returns and pay its Taxes, in each case when due (taking into account any applicable extensions), to continue to make maintenance capital expenditures to the extent set forth in Section 5.1(a) of the Company Disclosure Letter, during the period from the date hereof until the Effective Time (or such earlier date on which this Agreement may be terminated in accordance with Article VII), the Company shall carry on to market and promote its business in all material respects in the ordinary course of business consistent with past practice. To the extent consistent with the foregoing practices and except as otherwise consented to in writing by Parent, the Company shall use its commercially reasonable best efforts to preserve its current business organization, assets and propertiestechnology, preserve keep available the services of its business organizations intactcurrent officers and employees and keep its relationships with customers, and maintain existing relations and goodwill with Governmental Entities, alliances, customerscollaborators, suppliers, employees licensors, licensees, distributors and others having business associates dealings with them. In addition, and without limiting the generality of the foregoing, except for matters set forth in all material respects Section 5.1(a) of the Company Disclosure Letter or otherwise contemplated by this Agreement, during the Pre-Closing Period, Company shall not, and shall not permit any of its Subsidiaries to, do any of the following without the prior written consent of Buyer and Sub:
(i) amend its Restated Certificate or Restated Bylaws or similar organizational documents or change the number of directors constituting its entire board of directors;
(ii) (I)(A) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock or other equity interests, except that (1) the Company shall be permitted to pay dividends to the holders of Preferred Stock in accordance with the Company’s Certificate of Incorporation (provided, however, that such dividends shall be paid solely in cash if so requested in writing by Buyer), and (2) a wholly owned Subsidiary of Company may declare and pay a dividend or make advances to its parent or Company or (B) redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or other securities; (II) issue, sell, pledge, dispose of or encumber any (A) additional shares of its capital stock or other equity interests, (B) securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock or other equity interests, or (C) of its other securities, other than shares of Company Common Stock or Company Preferred Stock issued upon the exercise of any Options, Warrants or Company Preferred Stock outstanding on the date hereof in accordance with the terms thereof, as the case may be, as in effect on the date hereof; or (III) split, combine or reclassify any of its outstanding capital stock or other equity interests or amend the terms of any rights, warrants or options to acquire its capital stock or other securities;
(iii) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof (including entities which are Subsidiaries) or (B) any assets, including real estate, in an amount exceeding $5,000 individually or $25,000 in the aggregate, except purchases of assets, including without limitation, inventory, equipment and supplies in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, and except as (i) required by applicable Law, (ii) expressly required by this Agreement or (iii) otherwise set forth in Section 5.1 of the Company Disclosure Letter, during such period, the Company shall not, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed (except with respect to Sections 5.1(a) and 5.1(b), for which consent may be withheld in Parent’s sole discretion)):
(a) (i) declare, set aside or pay any dividends on, or make other distributions in respect of, any of its capital stock or Equity Interests or (ii) split, combine or reclassify any of its capital stock or Equity Interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or Equity Interests or redeem, purchase or otherwise acquire or offer to redeem any of its capital stock or Equity Interests;
(biv) authorize for issuance, issue, deliver, sell, pledge, grant, transfer or otherwise encumber any shares of its capital stock or equity interests, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares or interests, voting securities or convertible securities, other than the issuance of Shares pursuant to (iA) Company Stock Options outstanding as of the date hereof previously issued under the Company Stock Incentive Plans or (ii) the exchange of Shares for all (but not less than all) exercisable rights under the Rights Plan;
(c) amend the articles of incorporation or bylaws of the Company;
(d) other than transactions that would be permissible under clause (e) below, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof);
(e) make or agree to make any capital expenditure in an amount that exceeds $1,000,000 in the aggregate, other than any capital expenditure contemplated by the Company’s availability model as of the date of this Agreement (a true, complete and correct copy of which has been previously provided to Parent);
(f) other than in the ordinary course of business, transfer, assign, sell, lease, license, encumber or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise), or agree to transfer, assign, sell, lease, license, encumber or otherwise dispose of, or engage in any sale-leaseback transaction or agree to any such transaction with respect to, (i) any entity or material assets or (ii) any Owned Real Property;
(g) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantee thereof, rights other than (i1) indebtedness incurred in the ordinary course of business products and consistent with past practice under the Revolving Credit Agreement and (ii) capital leases incurred after the date hereof in the ordinary course of business consistent with past practice in an aggregate amount not to exceed $250,000 at any one time outstanding;
(h) other than in the ordinary course of business (including, for the avoidance of doubt, in connection with a capital expenditure permitted to be made pursuant to Section 5.1(e)), enter into, amend, modify or terminate, or grant any waiver under, any Subject Contract or any Contract that would constitute a Subject Contract if entered into prior to the date hereof (other than the expiration or renewal of any Subject Contract in accordance with its terms);
(i) enter into any lease of any real property, except any renewals or replacements of existing leases inventory in the ordinary course of business consistent with past practice; provided, (2) equipment and property no longer used in the operation of the Company’s business, or (3) assets related to discontinued operations or (B) grant or suffer any Liens other than Permitted Liens on any of their assets or rights other than in the ordinary course of business consistent with past practice;
(v) (A) amend, modify or terminate any Company Material Contract, waive, release or assign any material rights, claims or benefits thereunder or enter into any new Contract which would be a Company Material Contract, (B) amend, modify or terminate any Contract with a material manufacturer or supplier of materials, components or services for Xyrem, Antizol and Cystadane products or components, or waive, release or assign any material rights, claims or benefits thereunder, (C) enter into any new Contract with any Person (other than the FDA) with regards to or relating to Xyrem, (D) make any agreements with the FDA concerning Xyrem, provided that ParentBuyer’s prior written consent will be required with respect to the renewal of foregoing shall not be unreasonably withheld, or (E) sell, transfer or license to any lease (i) listed on Section 5.1 Person or otherwise extend, amend, or modify any rights to the Intellectual Property Rights of the Company Disclosure Letter or (ii) with respect to a distribution center or warehouse, such consent not to be unreasonably withheld or delayed with respect to the renewal of any lease listed on Section 5.1 of the Company Disclosure Letterits Subsidiaries;
(jvi) (A) enter into any employment or severance agreement with or grant any severance or termination pay to any officer, director or employee of Company or any Subsidiary of the Company; or (B) hire or agree to hire any new or additional employees or executive officers;
(vii) except as required to comply with applicable Law or as required by the terms of this Agreement, (A) adopt, enter into, amend, modify or terminate, amend or grant increase the amount or accelerate the payment or vesting of any waiver underbenefit or award or amount payable under any Company Benefit Plan or other arrangement for the current or future benefit or welfare of any director, executive officer or current or former employee, (B) increase in any manner the compensation or fringe benefits of, or pay any bonus to, any Related Party Transactiondirector, officer or, other than in the ordinary course of business and on terms that as a whole are no less favorable to consistent with past practice, employee, (C) pay any benefit not provided for under any Company Benefit Plan or adopt any new Company Benefit Plan or benefit, (D) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Company Benefit Plan (including the grant of stock options except for grants set forth in Section 5.1(a)(vii) of the Company than terms that would be obtained from an unaffiliated third partyDisclosure Letter), stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any Company Benefit Plans or agreements or awards made thereunder) or (E) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract, arrangement or Company Benefit Plan;
(kviii) (A) incur or assume any indebtedness for borrowed money (whether long-term or short-term); (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other than in the ordinary course of business, Person; (C) make any loans, advances or capital contributions to, or investments in, any other Person, Person (other than to wholly owned Subsidiaries or customary loans or advances to employees (other than the Company’s officers and directors) in respect of for travel or other related ordinary similar business expenses in accordance with past practice in an amount not exceeding $10,000 individually or $50,000 in the ordinary course of business, advances of expenses to officers and directors as permitted by the Company’s bylaws and any indemnification agreements to which the Company is a party aggregate); or extensions of credit to customers in the ordinary course of business;
(lD) except as may be required by concurrent changes in GAAP or applicable Law or as disclosed in the Company SEC Documents, make any change in its principles, practices, procedures and methods of financial or Tax accounting that would be material to the Company’s financial statements;
(m) merge or consolidate the Company with and into any other Person;
(n) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company;
(o) settle, release, waive settle or compromise any pending claim, litigation or threatened Action of or against the Company (i) requiring payment by the Company of an amount in excess of $25,000 in the aggregate, (ii) entailing the incurrence of any material obligation or liability of the Company, including costs or revenue reductions or obligations that would impose material restrictions on the business or operations of the Company, or (iii) that imposes any non-monetary relief that would be material to the Company;
(p) other legal proceeding other than in the ordinary course of business, enter into in accordance with past practice, and without admission of liability or pay, discharge or satisfy any Contract other claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other binding obligation than the payment, discharge or satisfaction of any such other claims, liabilities or obligations for the Company containing (i) any material restriction on amounts reserved against in the right of the Company to conduct its business as it is presently being conducted or currently contemplated to be conducted after the Merger, (ii) any provisions granting “most favored nation” status, in a manner that is material to the business consolidated financial statements of the Company, or (iii) a non-competition provision restricting the Company in a material manner;
(qix) (i) increase the compensation (including contingent compensation entitlements, such as severance pay) of change any current director, officer, employee accounting method used by it unless required by GAAP or consultant of the Company, except for increases in base salary or wages, annual bonus targets, hourly wage rate and benefits (including in connection with promotions or other changes in job status) for non-officer employees in the ordinary course of business consistent with past practice and in any event not to exceed, in the aggregate, three percent (3%) of any such individual’s total compensation, (ii) adopt any new employee benefit plan or arrangement, or amend, modify or terminate any existing Benefit Plan or Employment Agreement, in each case for the benefit of any current or former director, officer, employee or consultant of the Company, other than by applicable Law;
(x) to avoid the imposition of any excise tax under Section 4999 of the Code, (y) as required to cause such plans or agreements to not be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to not result in the application of the additional tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder), or (z) as permitted in clause (i) hereof, (iii) enter into any employment, severance, retention, incentive or special pay agreement or arrangement with any employees of the Company, (iv) make any new equity awards to any director, officer, employee or consultant of the Company, (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, compensation or benefits under, any Benefit Plan or Employment Agreement, (vi) enter into any collective bargaining agreements or (vii) hire any (A) employee with an annual base salary in excess of $100,000 or (B) management-level employee with responsibility for selecting and purchasing merchandise for the Company; except, in the case of each of clauses (i) through (vi), to the extent required by applicable Law, applicable Tax qualification requirements, this Agreement, or any Benefit Plan, Employment Agreement or other agreement in effect on the date of this Agreement;
(r) (i) make any material Tax election or take any material position on a material Tax Return filed after the date of this Agreement or adopt any material method of accounting therein that is inconsistent with elections made, positions taken or methods of accounting used in preparing or filing similar returns in prior periods, (ii) enter into any settlement settle or compromise of any material Tax liability, (iiiB) file amend any amended material Tax Return that would result in a material change in Tax liability, taxable income or lossreturn, (iv) change any annual Tax accounting period, (vC) enter into or modify any closing material agreement relating to Taxes, (D) make or change any material Tax liabilityelection, (E) surrender any right to claim a refund of Taxes, or (viF) consent to any extension or waiver of a statute of the limitation with respect period applicable to any material Tax Returnclaim or assessment;
(sxi) revalue any assets of the Company, except as required by GAAP or by applicable Law;
(xii) enter into any new line of business outside or enter into any Contract that restrains, limits or impedes the Company’s or any of its existing Subsidiaries’ ability to compete with or conduct any business or line of business;
(txiii) other than in take any action such that (A) the ordinary course aggregate cash and cash equivalents of business consistent with past practice, terminate, cancel, amend or modify any material insurance policies maintained by it covering the Company and its Subsidiaries on a consolidated basis that would appear on a consolidated balance sheet of the Company prepared in accordance with GAAP as of the Closing Date would be an amount less than $3,000,000 if the Closing Date is on or prior to June 30, 2005 or (B) net current assets on the Closing Date would be less than $1,000,000 (and if the Closing does not occur by June 30, 2005, Buyer and the Company agree to work together in good faith to address the cash requirements of the Company and its properties which is not replaced by a comparable amount of insurance coverageSubsidiaries);
(uxiv) change fiscal yearstake or omit to take any action which would make any of the representations or warranties of the Company contained in this Agreement untrue and incorrect in any material respect as of the date when made if such action had then been taken or omitted, or which would reasonably be expected to result in any of the conditions set forth in Article VI hereof not being satisfied; or
(vxv) authorize, agree or commit enter into an agreement to do any of the foregoing, or to authorize any of the foregoing.
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