Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld): (a) (x) 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 otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options); (b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option); (c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company; (d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action: (i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company; (ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders; (iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and (iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action. (e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business; (f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business); (g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000; (h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries; (i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate; (j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate; (k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from after the date of this Agreement hereof and prior to the Closing Date or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless PalEx shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct its businesses in the ordinary and usual course and consistent with past practice;
(xb) not (i) amend or propose to amend its charter or by-laws, (ii) split, combine or reclassify its outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions described in SCHEDULE 6.1;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, its capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock.
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business, (B) borrowings to refinance existing indebtedness on terms comparable with or better than those at the date hereof, or (C) borrowings to fund distributions to Stockholders of the accumulated adjustment account, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock stock, (iii) take or (z) purchase, redeem fail to take any action which action or otherwise acquire any shares of capital stock of failure would cause the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities the Stockholder (except to the extent of non-stock consideration, if any, received in the Merger) to recognize gain or loss for the withholding of shares of Common Stock in connection with Taxes payable in respect federal income tax purposes as a result of the exercise consummation of Options);
the Merger, (biv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness or (v) enter into any contract, day-to-day operations agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all reasonable efforts to preserve intact its business organizations and goodwill, keep available the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any services of its assets that have a value present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with it and not engage in excess of $100,000 individually any action, directly or in excess of $500,000 in indirectly, with the aggregate during any calendar month, except sales of inventory or obsolete assets in intent to adversely impact the Ordinary Course of Businesstransactions contemplated by this Agreement;
(f) except as permitted by clauses (d) confer on a regular and (e) above frequent basis with respect one or more representatives of PalEx to raw materials, inventory, supplies report operational matters of materiality and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement the general status of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)ongoing operations;
(g) (x) not enter into or amend any employment, severance, special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees, except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) ordinary course and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) not adopt, enter into or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, health care, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any employee or retiree, except as may be required as a result of a change to comply with changes in applicable law or in U.S. GAAP, change any the ordinary course of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company business and its Subsidiaries;consistent with past practices; and
(i) except maintain with financially responsible insurance companies insurance on its tangible assets and its businesses in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually such amounts and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, such risks and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement losses as are consistent with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;past practice.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization and Merger (Palex Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from the date of this Agreement to the earlier to occur of (i) Effective Time or the date of the termination of date, if any, on which this Agreement or (ii) the Effective Timeis earlier terminated pursuant to its terms, the Company shall, and shall cause each of will conduct its Subsidiaries to, in all material respects carry on its business operations only in the regular ordinary and ordinary usual course and, to the extent of business and consistent therewith, with past practice and will use its reasonable best efforts to preserve intact its current present business organization, keep available the services of its current present officers and key employees and preserve its relationships with customers, suppliers and others having business dealings with itit to the end that its goodwill and on-going business shall not be impaired at the Effective Time. During such period the Company shall promptly report to Parent any occurrence or omission which shall have caused any representation or warranty of the Company hereunder to become untrue as of the time of such occurrence or omission, and shall confer on a regular and frequent basis with representatives of Parent to report operational matters of a material nature and to report the general status of the ongoing operations of the business of the Company. Without limiting the generality of the 29 -25- foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in and the Company Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXSchedule, the Company shall will not, and shall cause each of its Subsidiaries not toprior to the Effective Time, without the prior written consent of Parent (which shall not be unreasonably withheld):in each instance:
(a) (x) declareissue, set aside sell or pay any dividends onpledge, or make authorize or propose the issuance, sale or pledge of (i) any other actual, constructive or deemed distributions in respect of, shares of capital stock of any class of its capital stockthe Company (including Company Shares), or otherwise make securities convertible into any payments such shares, or any rights, warrants or options to its stockholders in their capacity as suchacquire any such shares or convertible securities, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, or (yii) split, combine or reclassify any of its capital stock 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 outstanding Company Shares;
(b) purchase or (z) purchase, redeem or otherwise acquire acquire, or propose to purchase or redeem or otherwise acquire, any outstanding shares of capital stock of the any class (including Company Shares), or securities convertible into any of its Subsidiaries or any other securities thereof such shares, or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)convertible securities;
(bc) (x) issue, deliver, sell, pledge, dispose of declare or otherwise encumber pay any dividend or distribution on any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (stock other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated approved in writing by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the CompanyParent;
(d) except as required by contractual commitments existing on the date hereofauthorize, acquire recommend, propose or agree announce an intention to acquireauthorize, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging recommend or consolidating withpropose, or by purchasing enter into a substantial portion letter of the assets of intent (whether or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1not binding), an action taken will be deemed to have been taken agreement in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) principle or an agreement with respect to sales any merger, consolidation or business combination (other than the Merger), any acquisition of inventoryassets or securities, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for any disposition of assets or securities, or any change in the last 12 months andCompany's capitalization, if sales involve or an entry into a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken material contract other than in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (business or committee of the board of directors) and does not require any other separate amendment or special authorization modification of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.material contract rights;
(e) except to the extent required by contractual commitments existing on the date hereofas may be contemplated herein, selltake any action which would make any representation or warranty in this Agreement untrue or incorrect, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any as if made as of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businesssuch time;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint ventureagreement, lease contract or management agreement commitment (other than in the ordinary course of business, agreements, contracts or other material agreement commitments which were under negotiation on the date hereof and which are disclosed on the Company Disclosure Schedule, the Secured Note and the Security Agreement) which, if entered into prior to the date hereof, would be required to be listed in Section 4.13 of the Company Disclosure Schedule and which involves a payment, obligation or any of its Subsidiaries if, commitment in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries excess of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)10,000;
(g) (x) except as contemplated by Section 7.11 hereof enter into any contract, agreement, license or for borrowings incurred commitment which would be breached or violated or in the Ordinary Course respect of Business (including drawdowns as permitted which a right of acceleration would be created by the Credit Agreement) Company's execution, delivery and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for performance of this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement Agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related the transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000contemplated hereby;
(h) except as may be required as a result (i) increase or agree to increase the compensation payable or to become payable to its officers or employees, (ii) grant any severance or termination pay to, or enter into any employment or severance agreement, with any employee, (iii) enter into any collective bargaining agreement, (iv) establish, adopt, enter into or amend in any material respect any bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, trust, fund, policy or arrangement for the benefit of a change in law any directors, officers or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesemployees;
(i) except make or change any material election in the Ordinary Course respect of BusinessTaxes, adopt or change any accounting method in respect of Taxes, enter into any closing agreement, settle any claim or compromise assessment in respect of Taxes, or consent to any material pending extension or threatened suit, action waiver of the limitation period applicable to any claim or claim, other than settlements or compromises requiring payments by the Company or any assessment in respect of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;Taxes; or
(j) pay, discharge agree in writing or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating otherwise to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of take any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing actions.
Appears in 1 contract
Samples: Agreement and Plan of Merger and Reorganization (Silknet Software Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from after the date of this Agreement hereof and prior to the Closing Date or earlier to occur of (i) the date of the 32 termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and consistent with past practice;
(xb) not (i) amend or propose to amend their respective charters or By-laws, (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions by a wholly owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make agree to issue, sell, pledge or dispose of or otherwise cause to become outstanding, any other actual, constructive or deemed distributions in respect additional shares of, or any options, warrants or rights of any kind to acquire any shares of their capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock, except that the Company may issue shares (i) upon conversion of convertible securities and exercise of options outstanding on the date hereof and (ii) in connection with the potential acquisitions described in Schedule 6.1;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (x) borrowings in the ordinary course of business or (y) borrowings to refinance existing indebtedness, the terms of which shall be reasonably satisfactory to Parent, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize exchangeable for its capital stock, (iii) take any action which would jeopardize the issuance treatment of the Merger as a pooling of interests under APB 16, (iv) take or fail to take any other securities in respect of, action which action or failure would cause the Company or its stockholders (except to the extent that any stockholders receive cash in lieu of fractional shares) to recognize gain or in substitution loss for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock federal income tax purposes as a result of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect consummation of the exercise Merger, (v) make any acquisition of Options);
any assets or businesses other than acquisitions of assets in the ordinary course of business, (bvi) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness or (vii) enter into any contract, day-to-day operations agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all commercially reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the extent required services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them and not engage in any action, directly or indirectly, with the intent to adversely impact the transactions contemplated by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Agreement;
(f) except as permitted by clauses (d) confer on a regular and (e) above frequent basis with respect one or more representatives of Parent to raw materials, inventory, supplies report operational matters of materiality and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement the general status of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)ongoing operations;
(g) (x) not enter into or amend any employment, severance, special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees, except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) ordinary course and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from and after the date of this Agreement to until the earlier to occur of (i) the date of the termination of this Agreement in accordance with its terms or (ii) the Effective Time, unless Parent and Merger Sub shall otherwise consent in writing: (a) the Company shallshall conduct its, and shall cause each of its Subsidiaries toto conduct their, in all material respects carry on its business in the regular and ordinary course and, of business; and (b) to the extent consistent therewith, each of the Company and its Subsidiaries shall use its commercially reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and (i) preserve its business organization intact, (ii) maintain and keep material properties and assets in good repair and condition, (iii) maintain all Required Permits and (iv) maintain its material business relationships with customersprovided, suppliers and others having in the case of this clause (iv), the loss of customers of the Company in the ordinary course of business dealings with itshall not be deemed a breach of this Section 5.1. Without limiting the generality of the foregoingforgoing, and except as otherwise expressly contemplated provided in this Agreement, in connection with the Merger or as required by this Agreement applicable Law, or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXon Schedule 5.1, the Company shall not, and shall cause each of its Subsidiaries not to, without the Parent and Merger Sub’s prior written consent of Parent (which shall not be unreasonably withheld):consent:
(a) issue, sell, deliver, purchase, repurchase, redeem, retire, pledge, encumber or otherwise acquire or dispose of any shares of capital stock or other securities of the Company or any of its Subsidiaries or grant options, warrants, calls or other rights to purchase or acquire any shares of capital stock or other securities of the Company or any of its Subsidiaries, other than in connection with the exercise of Company Options or the vesting of Company Restricted Stock, in each case that are outstanding on the date hereof and set forth on Schedule 3.2(c);
(xb) declare, set aside or pay any dividends on, or make any other actualdistributions (whether in cash, constructive stock or deemed distributions property) in respect of, any of its capital stock, other than dividends and distributions by a direct or otherwise make any payments indirect wholly owned Subsidiary to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, parent;
(yc) split, adjust, combine or reclassify any of its capital stock 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 stock;
(d) make any change to the certificate of incorporation or bylaws of the Company or the organizational documents of the Subsidiaries (zwhether by merger, consolidation or otherwise);
(e) purchasemake any acquisition of, redeem or otherwise acquire any shares investment in, assets (other than the purchase of capital stock supplies or inventories or the sale or purchase of marketable securities comprising the investment portfolios of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken each case in the ordinary course of the normalbusiness practice), day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (securities or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessbusinesses;
(f) except as permitted by clauses incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith, that individually or in the aggregate are in excess of $250,000, or delay any capital expenditures committed to prior to the date of this Agreement;
(dg) fail to maintain and protect or abandon or allow to lapse, expire or be cancelled any registration or application for registration for material Owned Intellectual Property;
(eh) above adopt a plan or agreement of, or resolutions providing for or authorizing, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, in each case with respect to raw materials, inventory, supplies and obsolete assets, the Company or any of its Subsidiaries;
(i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (iiA) or enter into any joint ventureContract other than in the ordinary course of business that would have been a Material Contract if entered into prior to the date hereof, lease without providing five (5) days prior written notice to Parent, (B) amend, renew, extend, or management agreement modify any Material Contract (or Contract that would have been a Material Contract if entered into prior to the date hereof) other material agreement than in the ordinary course of business without providing five (5) days prior written notice to Parent or (C) terminate or otherwise waive, release or assign any rights, claims or benefits under any Material Contract (or Contract that would have been a Material Contract if entered into prior to the date hereof) that provides for payment to or by the Company of in excess of $150,000; provided that nothing in this clause (i) shall permit the Company or any of its Subsidiaries ifto enter into a Contract or take any other action if otherwise prohibited from doing so under another clause of this Section 5.1;
(j) repurchase, prepay or incur any Indebtedness, including by way of a guarantee or an issuance or sale of any debt securities, or assume, guarantee, endorse or otherwise become liable for any Indebtedness or other obligations of any other Person, or enter into any arrangement having the economic effect of any of the foregoing, other than accounts payable in each casethe ordinary course of business;
(k) (A) alter or amend the rate or terms of compensation (including salary and bonus), such contractbenefits or severance of any of its directors or officers, agreementwhether past or present, commitment(B) pay or agree to pay any pension, ventureretirement allowance or other employee benefit not required or permitted by any existing Benefit Plan or other agreement or arrangement existing on the date hereof to any director or officer, lease whether past or management agreement involves present, or could reasonably be expected to involve under any applicable Law, (C) alter or amend the receipt rate or payment by terms of compensation (including salary and bonus), benefits or severance of any employee (other than past or present directors and officers) or consultant of the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month other than alterations or amendments in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangementsbusiness that, in the aggregate, having do not result in a value material increase in excess benefits or compensation expense to the Company, (D) enter into or amend any employment, bonus, severance or retirement contract or adopt any employee benefit plan or (E) grant to any director, officer or employee, past or present, any change of $100,000control or termination pay or benefits;
(hl) hire any new employees other than (A) non-officer employees in the ordinary course of business and (B) a head of the Company’s performance management group (in the case of clause (B), without providing five (5) days’ prior written notice to Parent);
(A) sell, lease, license, pledge, transfer or otherwise dispose of any of its property, assets or businesses, other than sales of inventory or obsolete equipment in the ordinary course of business, or (B) mortgage, pledge, hypothecate, grant any security interest in or create or incur a Lien (other than a Permitted Lien) on any of its property, assets or businesses;
(n) make any loans, advances or capital contributions, except advances for travel and other normal business expenses to officers and employees, in an aggregate amount outstanding at any one time not to exceed $25,000;
(o) fail to maintain its properties and assets in good repair and condition, except to the extent of wear or use in the ordinary course of business and consistent with past practice or damage by fire or other unavoidable casualty;
(p) except as may be required as a result of a by GAAP or applicable Law, make any change in law its accounting practices, policies or procedures;
(q) (A) institute, pay, compromise, settle or dismiss any action, claim, demand, lawsuit, proceeding or arbitration by or before any Governmental or Regulatory Authority threatened against, relating to or involving the Company or its Subsidiaries, other than in U.S. GAAPthe ordinary course of business consistent with past practices but not, change in any individual case, in excess of $150,000 or, in the aggregate, in excess of $250,000, or (B) waive, relinquish, release, grant, transfer or assign any right with a value, in any individual case, in excess of $150,000 or, in the aggregate, in excess of $250,000;
(r) engage in any transaction with, or enter into any agreement, arrangement, or understanding with, directly or indirectly, any Company Related Party other than wholly-owned Subsidiaries of the Company or pursuant to agreements in force on the date of this Agreement as set forth on Schedule 3.25;
(s) communicate with its employees regarding the compensation, benefits or other treatment that they will receive in connection with the Merger, unless any such communications are consistent with prior directives or documentation provided to the Company by Parent (in which case, the Company shall provide Parent with prior notice of and the opportunity to review and comment upon any such communications);
(t) take any action which would reasonably be expected to result in any of the accounting principles conditions to the Merger set forth in Article VII not being satisfied or practices used by it materially affecting that would reasonably be expected to prevent, delay or impair the reported consolidated assets, liabilities or results of operations ability of the Company and its Subsidiariesto consummate the Merger;
(iu) except in terminate the Ordinary Course employment of Business, settle any officer or compromise any material pending or threatened suit, action or claim, other key employee other than settlements for good reason or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregatefor reasonable cause;
(jv) pay, discharge or satisfy enter into any material claims, liabilities or obligations, other than new line of business outside of the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateexisting business segments;
(kw) amend, modify, extend, renew or terminate any Real Property Lease, or enter into any new lease, sublease, license or other agreement for the use or occupancy of any real property;
(x) increase in make, revoke or amend any manner material Tax election or change any material method of reporting income or deductions for Tax purposes, file or amend any Tax Return, enter into any closing agreement, settle any Tax claim or assessment, consent to any extension or waiver of the compensation and employee benefits limitation period applicable to any Tax claim or assessment, or take any other similar action relating to the filing of any Tax Return or the payment of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, Tax; or
(y) become a party to, amend or commit itself agree in writing to take any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing actions.
Appears in 1 contract
Samples: Merger Agreement (Mediware Information Systems Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of as contemplated or permitted by this Agreement or Agreement, (ii) the Effective Timeas required by applicable Law, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships or (iii) with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which consent shall not be unreasonably withheld):, conditioned or delayed), from the date hereof until the earlier of the Effective Time and the termination of this Agreement in accordance with Article VIII, (A) the Company shall use commercially reasonable efforts to conduct the business of the Group Companies in the ordinary course in all material respects and use its commercially reasonable efforts, consistent with past practice, to preserve intact its business organizations and relationships with third parties and to keep available the services of its present officers and employees and (B) the Company shall not, nor shall it permit any of the Group Companies to:
(a) amend its memorandum and articles of association or equivalent organizational documents;
(xb) (i) split, combine or reclassify any shares in its share capital, (ii) declare, set aside or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect ofof its share capital, except for dividends by any of its capital stockdirect or indirect wholly-owned Subsidiaries or (iii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise make acquire any payments to its stockholders in their capacity as suchshare capital or registered capital of the Company or any other Group Company, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any acquisition by the Company of its capital stock securities in connection with the forfeiture of Company Options or issue repurchase of unvested Restricted Shares, the acquisition by the Company of its securities in connection with the net exercise of Company Options in accordance with the terms thereof or the transfer or other disposition of securities between or among the Company and its direct or indirect wholly-owned Subsidiaries;
(c) issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of any share capital or registered capital of the Company or any other Group Company, other than the issuance of any share capital or registered capital of the Company pursuant to the Share Incentive Plans, the transfer or other disposition of securities between or among the Company and its direct or indirect wholly-owned Subsidiaries, or pursuant to existing contracts or commitments;
(d) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses with a value in respect ofexcess of US$50 million in any single transaction or series of related transactions, other than (i) pursuant to existing contracts or commitments or (ii) in lieu the ordinary course of business;
(e) sell, lease or otherwise transfer any of its assets, securities, properties, interests or businesses with a value in excess of US$50 million in any single transaction or series of related transactions, other than (i) pursuant to existing contracts or commitments or (ii) in the ordinary course of business;
(f) other than in connection with actions permitted by Section 5.01(d), make any material loans, advances or capital contributions to, or investments in, any other person, other than in the ordinary course of business or in substitution an amount not in excess of US$50 million in any single transaction or series of related transactions or between the Group Companies;
(g) incur any indebtedness for shares borrowed money or guarantees thereof with an amount in excess of US$50 million in any single transaction or series of related transactions, other than (i) any indebtedness or guarantee incurred in the ordinary course of business or (ii) incurred between the Company and any of its capital stock direct or indirect wholly-owned Subsidiaries or between any of such direct or indirect wholly-owned Subsidiaries;
(zh) purchasechange the Company’s methods of accounting in any material respects, redeem except as required by concurrent changes in GAAP or otherwise acquire applicable Law;
(i) settle, or offer or propose to settle, (i) any shares of capital stock of material litigation, investigation, arbitration, proceeding or other claim involving or against the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) any shareholder litigation or enter into any joint venture, lease or management agreement or other material agreement of dispute against the Company or any of its Subsidiaries ifofficers or directors or (iii) any litigation, arbitration, proceeding or dispute that relates to the Transactions, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or case other than any of its Subsidiaries of $100,000 per month individually and $500,000 per month settlement (A) in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business);
(g) (x) except as contemplated by Section 7.11 hereof business or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases pursuant to existing contracts or other similar instrumentscommitments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction(B) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of requiring the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;to pay monetary damages not exceeding US$50 million; or
(j) payagree, discharge resolve or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating commit to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Mindray Medical International LTD)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and in a manner substantially consistent with past practice;
(xb) not (i) amend or propose to amend their respective articles of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock, or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly owned subsidiary of the Company by a direct or indirect wholly owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or borrowings under the existing credit facilities of the Company or of any of its subsidiaries up to the existing borrowing limit on the date hereof, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed Two Million, Seven Hundred Seventy-Five Thousand Dollars ($2,775,000.00), (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Plans, (iii) make any acquisition of any assets or any businesses other than expenditures for current assets for fixed or capital assets in each case in the ordinary course of its Subsidiaries or any other securities thereof or any rightsbusiness, warrants or options to (iv) without Parent's consent, acquire any such shares or other securities property, (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance (A) sales of shares upon the exercise of Options and for pledges businesses or assets disclosed in Section 5.01 of the stock Company Disclosure Schedule, (B) pledges or encumbrances pursuant to existing credit facilities or other permitted borrowings, (C) sales or dispositions of the Subsidiaries of the Company, including foreign Subsidiaries, which are required businesses or assets as may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplieslaw, and inventory in the Ordinary Course (D) sales or dispositions of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness, day-to-day operations or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use best efforts to preserve intact their respective business organizations and goodwill, keep available the extent required services of their respective present officers and key employees, and use all reasonable efforts to preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any terms of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Agreement;
(f) not enter into, amend, modify or renew any employment, consulting, severance or similar agreement with, or grant any salary, wage or other increase in compensation or increase in any employee benefit to, any director or officer of the Company or of any of its subsidiaries, except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitmentfor changes that are required by applicable law, (ii) or enter into any joint venture, lease or management agreement or other material agreement to satisfy obligations existing as of the Company date hereof, or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month (iii) in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business)business consistent with past practice;
(g) (x) except not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as contemplated may be required by Section 7.11 hereof applicable law or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceterms of contractual obligations existing as of the date hereof, incur including any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000collective bargaining agreement;
(h) not make expenditures in excess of expenditures permitted by the Company's last budget approved by the Board of Directors, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to make expenditures, except (i) expenditures which the Company or its subsidiaries are currently contractually committed to make, (ii) other expenditures not exceeding $50,000 in each such case and $150,000 in the aggregate, (iii) for emergency repairs and other expenditures necessary in light of circumstances not anticipated as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles date of this Agreement which are necessary to avoid significant disruption to the Company's business or practices used by it materially affecting operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), or (iv) for repairs and maintenance in the reported consolidated assetsordinary course of business consistent with past practice; provided; however, liabilities or results of operations that all expenditures under Sections 1.10 of the Company and its SubsidiariesDisclosure Schedule shall be permitted, subject to the terms of this Agreement;
(i) except in the Ordinary Course of Businessnot make, settle change or compromise revoke any material pending Tax election unless required by law or threatened suit, action make any agreement or claim, other than settlements settlement with any taxing authority regarding any material amount of Taxes or compromises requiring payments by which would reasonably be expected to materially increase the obligations of the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month the Surviving Corporation to pay Taxes in the aggregatefuture;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course maintain all existing insurance policies of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses subsidiaries in full force and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;effect.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as Unless XxxxXxx.xxx shall otherwise expressly contemplated by this Agreement or as set forth agree in writing, the Disclosure Schedule, during Company covenants and agrees to conduct the period from Company's business between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective TimeTime in and only in, and the Company shall not take any action except in, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to of business and in a manner consistent with past practice and in accordance with applicable law; and the extent consistent therewith, Company shall use its reasonable best efforts to preserve intact its current the business organizationorganization of the Company, to keep available the services of its the current officers and officers, employees and consultants of the Company and to preserve its the current relationships with of the Company with, and the goodwill of, customers, suppliers and others having other Persons with which the Company has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly do, or propose to do, any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):XxxxXxx.xxx:
(a) amend or otherwise change the Company's Articles of Incorporation or Bylaws;
(xb) except for the issuance of shares of Company Common Stock upon the exercise or conversion of currently outstanding Stock Purchase Rights, issue, sell, contract to issue or sell, pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge, disposition, grant or Encumbrance of (i) any shares of capital stock of any class of the Company, (ii) any assets of the Company, except in the ordinary course of business and in a manner consistent with past practice or (iii) any options, warrants, convertible securities or other rights 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;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock or make any other actualsecurities, constructive property or deemed distributions in otherwise, with respect of, to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise make any payments to its stockholders in their capacity as suchacquire, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March directly or indirectly, 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(be) (xi) issueacquire (including, deliverwithout limitation, sellby merger, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoconsolidation, or any rights, warrants acquisition of stock or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (yassets) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess material amount of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of inventoryany Person, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months andor make any loans or advances, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of business and consistent with past practice; (iii) enter into any contract or agreement other than in the normalordinary course of business, day-to-day operations of the Companyconsistent with past practice; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require authorize any other separate or special authorization of any nature (that is, single capital expenditure which is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually 50,000 or capital expenditures which are, in the aggregate, in excess of $500,000 200,000 for the Company taken as a whole; (v) enter into any agreement in which the aggregate during obligation of the Company exceeds $50,000 or which shall not terminate or be subject to termination for convenience within 30 days following execution; (vi) license any calendar monthTechnology or IP Rights; or (vii) enter into or amend any contract, except sales of inventory agreement, commitment or obsolete assets arrangement with respect to any matter set forth in the Ordinary Course of Businessthis subsection (e);
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsenter into or amend any employment, inventory, supplies and obsolete assets, (i) amend consulting or otherwise modifyagency agreement, or terminateincrease the compensation payable or to become payable to its officers, employees, agents or consultants, or grant any material contractseverance or termination pay to, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement any director, officer or other material agreement employee of the Company Company, or establish, adopt, enter into or amend any of its Subsidiaries ifEmployee Benefit Plan, in each casecollective bargaining, such contractbonus, profit-sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance, benefit or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any director, officer or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employee;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action, other than reasonable and usual actions in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness with respect to accounting methods, policies or procedures (including for this purpose any indebtedness evidenced by notesincluding, debentureswithout limitation, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement procedures with respect to the payment of accounts payable and obligations under letters collection of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000accounts receivable);
(h) except as may be required as a result of a change in law make any Tax election or in U.S. GAAP, change settle or compromise any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its SubsidiariesTax liability;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claimsclaim, liabilities liability or obligationsobligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice;
(j) take any action that would or is reasonably likely to result in any of liabilities reflected the representations or reserved against inwarranties of the Company set forth in this Agreement being untrue in any material respect, or contemplated by, in any covenant of the Company Financial Statements (or the notes thereto) or incurred set forth in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e)this Agreement being breached, or arising from in any of the Transactions, including payments conditions to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month the Merger specified in the aggregate;Article IV not being satisfied; or
(k) (x) increase in any manner the compensation and employee benefits of agree to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Ubarter Com Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement hereof to the earlier to occur of (i) the date consummation of the termination of Offer, except as Purchaser shall otherwise agree in writing, as required by applicable law, or as otherwise contemplated by this Agreement or (ii) the Effective TimeAgreement, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business shall conduct their respective businesses in the regular and ordinary course andcourse, to consistent with past practice. Further, the extent consistent therewith, Company shall use its reasonable best efforts to preserve intact the business organization of the Company and each of its current business organizationSubsidiaries, to keep available the services of its current and their present officers and key employees in good standing, and to preserve its the goodwill of those having business relationships with customers, suppliers it and others having business dealings with itits Subsidiaries. Without limiting the generality of and in addition to the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Company Disclosure SchedulesLetter hereto or as otherwise provided in this Agreement, and subject prior to the provisions consummation of Section 7.5 and Article IXthe Offer, neither the Company shall not, and shall cause each nor any of its Subsidiaries not towill, without the prior written consent of Parent (which shall not be unreasonably withheld):Purchaser:
(a) amend its charter or by-laws;
(xb) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities, except by the Company in connection with the exercise of employee options granted and outstanding before the date of this Agreement;
(c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect of, of its capital stock or redeem or otherwise acquire any of its capital stock, securities or otherwise make any payments securities of its subsidiaries; provided that the Company may pay to its stockholders in their capacity as such, other than holders of the Shares the regular quarterly dividend of not greater than $.04 0.16 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of previously declared by the Company, including foreign Subsidiariesthe record date and payment date for which have previously been fixed by the Board as December 2, which are required or may be required under the existing terms of borrowings or indebtedness)1996 and January 2, (y) except as contemplated by this Agreement1997, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companyrespectively;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in natureincur or assume any material long-term debt or, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of the normalbusiness consistent with past practice under existing lines of credit, dayincur or assume any material short-to-day operations term debt; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for any material obligations of any other person except wholly owned Subsidiaries of the CompanyCompany in the ordinary course of business and consistent with past practices; and
or (iviii) does not require authorization by make any material loans, advances or capital contributions to, or investments in, any other person (other than loans or advances to the Company’s board of directors ('s Subsidiaries and customary loans or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is advances to employees in accordance with the authority delegated to the person making the decision or taking the action.past practices);
(e) except to enter into, adopt or materially amend any bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, pension, retirement, deferred compensation, employment, severance or other employee benefit agreements, trusts, plans, funds or other arrangements of or for the extent benefit or welfare of any Company Employee, or increase in any manner the compensation or fringe benefits of any Company Employee or pay any benefit not required by contractual commitments any existing on plan and arrangement (including, without limitation, the date hereofgranting of stock options, stock appreciation rights, shares of restricted stock or performance units) or enter into any contract, agreement, commitment or arrangement to do any of the foregoing; provided, however, that nothing herein shall prohibit normal increases in wages or salary or immaterial fringe benefits in the ordinary course of business that are consistent with the past practices;
(f) acquire, sell, lease or otherwise dispose of, of any assets outside the ordinary course of business or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 are material, individually or in excess of $500,000 in the aggregate during any calendar monthaggregate, except sales of inventory or obsolete assets in to the Ordinary Course of Business;
(f) except Company and its Subsidiaries, taken as permitted by clauses (d) and (e) above with respect to raw materialsa whole, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease material commitment or management agreement or other material agreement transaction outside the ordinary course of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)business;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required by law and except as a result of a change in law set forth on the Company Disclosure Letter, take any action to terminate or in U.S. GAAP, change amend any of its employee benefit plans with respect to or for the accounting principles or practices used by it materially affecting benefit of Company Employees;
(h) hire any employee other than to replace an employee; provided, however, that the reported consolidated assets, liabilities or results annual salary of operations of the Company and its Subsidiariessuch replacement employee shall not exceed $50,000;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claimsclaims (including claims of stockholders), liabilities or obligationsobligations (absolute, other than accrued, asserted or unasserted, contingent or otherwise), except for the payment, discharge or satisfaction of (i) liabilities or obligations in the Ordinary Course ordinary course of Business of business consistent with past practice or in accordance with their terms as in effect on the date hereof, (ii) liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements Company's consolidated audited financial statements (or in the notes theretothereof) dated September 30, 1996, or incurred waive, release, grant, or transfer any rights of material value or modify or change in any material respect any existing license, lease, contract or other document, other than in the Ordinary Course ordinary course of Business or relating to matters expressly permitted business consistent with past practice;
(j) change any material accounting principle used by clauses (d) or (e)it, or arising from the Transactions, including payments to advisors, and except for payments, discharges such changes as may be required to be implemented following the date of this Agreement pursuant to generally accepted accounting principles or rules and satisfaction regulations of no more than $100,000 individually and $500,000 per month in the aggregateSEC promulgated following the date hereof;
(k) (x) increase take any action that would result in any manner the compensation and employee benefits of any of its directors, executive officers representations and other key employees, hire warranties in this Agreement becoming untrue in any new employees material respect;
(other than l) make any material change in or exception to replace an employee whose employment has terminated)the Company's policy of not accepting returns of products shipped to customers;
(m) make any material change in the terms and conditions of the Company's arrangements with its copackers; or
(n) take, or pay agree in writing or otherwise to take, any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing actions.
Appears in 1 contract
Samples: Merger Agreement (PCS Holding Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of the Effective Time and the date, if any, on which this Agreement is terminated in accordance with Section 7.1, except (i) the date of the termination of as may be required by Law, (ii) as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as may be expressly contemplated or required pursuant to this Agreement or (iiiv) as set forth on Section 5.1 of the Effective TimeCompany Disclosure Letter, (A) the Company shall, and shall cause each of its Subsidiaries to, conduct the business of the Company and its Subsidiaries in the ordinary course of business in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve intact its current material assets and business organization, keep available the services of organization and maintain its current officers and employees and preserve its existing relationships with material customers, suppliers suppliers, distributors, regulators and others having business dealings with it. Without limiting the generality of the foregoingpartners, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (B) the Company shall not, and shall cause each of its Subsidiaries not to, without directly or indirectly (it being understood that if any action is permitted by any of the prior written consent following sub-sections of Parent (which this Section 5.1, such action shall not be unreasonably withhelddeemed permitted pursuant to Section 5.1(A)):
(a) amend (xi) declare, set aside the Articles of Association or pay any dividends on, (ii) such equivalent organizational or make any other actual, constructive or deemed distributions in respect of, governing documents of any of its capital stock, or otherwise make any payments to its stockholders in their capacity as suchSubsidiaries, other than the regular quarterly dividend amendments to such documents of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries that would not be adverse in any material respect to Parent or Merger Sub and would not reasonably be expected to prevent, impede or delay the consummation of any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)Merger or the other transactions contemplated by this Agreement;
(b) split, reverse split, combine, subdivide, reclassify, redeem, repurchase or otherwise acquire the Company’s capital stock or other equity or voting securities, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of the Company’s capital stock or other equity or voting securities; provided that the Company may repurchase or otherwise acquire shares in connection with (xi) the applicable Company Equity Plan in effect as of the date of this Agreement, (ii) the acceptance of Company Ordinary Shares as payment for the per share exercise price of the Company Equity Awards or as payment for Taxes incurred in connection with the exercise, vesting and/or settlement of Company Equity Awards, in each case in accordance with the applicable Company Equity Plan or (iii) the forfeiture of Company Equity Awards;
(c) issue, deliver, sell, pledge, dispose of of, encumber, grant or otherwise encumber authorize the same with respect to, any shares of the Company’s or its Subsidiaries’ capital stock, any or other equity or voting securities or equity equivalent or any securities convertible intosecurities, or any rightsoptions, warrants or options to acquirewarrants, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance rights of any kind to acquire any shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign ’s or any of its Subsidiaries, which are required ’ capital stock or other equity or voting securities; provided that the Company may be required under take any of the existing terms foregoing actions in connection with any Company Option issued or granted in compliance with Section 5.11(f) and the Company may issue shares of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate Company’s capital stock upon the vesting settlement of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms Equity Award outstanding as of the applicable equity incentive plan or agreement governing date of this Agreement in accordance with its terms as in effect on the applicable Company Stock Option);
(c) amend its Certificate date of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companythis Agreement;
(d) except as required with respect to the dividend contemplated by contractual commitments existing on Section 5.21 and the payment of the dividend declared by the Company prior to the date hereofhereof with a payment date of May 6, acquire 2018, declare, set aside, authorize, make or agree pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to acquirethe Company’s or any of its Subsidiaries’ capital stock or other equity interests, except for purchases of raw materials, supplies, other than cash dividends and inventory in the Ordinary Course of Business, distributions paid by merging any direct or consolidating with, or by purchasing a substantial portion indirect wholly owned Subsidiary of the assets of Company to the Company or equity in, or by any other manner, any business direct or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices indirect wholly owned Subsidiary of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing pursuant to any Company Benefit Plan or Labor Agreement as in effect on the date hereofof this Agreement, sell(i) establish, lease or otherwise dispose ofadopt, enter into any new, amend, terminate, or agree take any action to sell, lease or otherwise dispose ofaccelerate rights under, any Company Benefit Plan or plan, program, policy, practice, agreement or arrangement that would be a Company Benefit Plan if it had been in effect on the date of this Agreement (except that the Company and its assets that have a value Subsidiaries may enter into offer letters and employment agreements with newly hired employees in the ordinary course of business so long as such offer letters and agreements are pursuant to the standard form agreement used by the Company and its Subsidiaries in the applicable jurisdiction and do not provide for any notice or severance pay in excess of $100,000 individually amounts required under applicable Law); (ii) grant or pay, or commit to grant or pay, any bonus or incentive award or payment; (iii) increase, or commit to increase, the amount of the compensation or benefits of any employee of the Company or any Subsidiary of the Company, except for increases in excess base salaries or hourly rates of $500,000 pay of employees in the aggregate during any calendar monthordinary course of business and consistent with past practice in an amount not to exceed, except sales of inventory or obsolete assets for all increases in the Ordinary Course aggregate, 3% of Businessthe aggregate annual cost of base salaries and hourly rates of pay for all employees of the Company measured as of the date hereof; (iv) accelerate the time of payment or funding of any amounts under, or increase the amount of funding required pursuant to, any Company Benefit Plan; (v) hire or make an offer to hire, or promote, any employee to the position of (1) Chief Executive Officer, or (2) a position that directly reports to the Chief Executive Officer (each, a “Senior Employee”); or (vi) terminate the employment of any Senior Employee other than for cause;
(f) except as permitted by clauses (d) and (e) above with respect forgive any loans or advances to raw materialsany officers, inventory, supplies and obsolete assets, (i) amend employees or otherwise modifydirectors of the Company or its Subsidiaries, or terminateany of their respective Affiliates, or change its existing borrowing or lending arrangements for or on behalf of any material contractof such Persons pursuant to an employee benefit plan or otherwise, agreement except in the ordinary course of business;
(g) acquire (including by merger, consolidation or commitmentacquisition of stock or assets or otherwise) any corporation, (ii) or enter into any partnership, limited liability company, joint venture, lease other business organization, any division or management agreement segment thereof or any assets of any other material agreement Person comprising a business or division or segment thereof;
(h) sell, pledge, dispose of, transfer, abandon, allow to lapse, dedicate to the public, lease, license, mortgage, grant any Lien (other than Permitted Liens) on or otherwise transfer or encumber any portion of the tangible or intangible assets, business, properties or rights of the Company or any of its Subsidiaries ifhaving a fair market value in excess of $50 million in the aggregate, except (i) sales in each casethe ordinary course of business, (ii) transfers solely among the Company and its direct or indirect wholly owned Subsidiaries or among its direct or indirect wholly owned Subsidiaries, (iii) disposition of obsolete tangible assets or expired or stale inventory, (iv) with respect to leases, licenses or other similar grants of real property, any grant, amendment, extension, modification, or renewal in the ordinary course of business, or (v) non-exclusive licenses of Intellectual Property Rights to customers or suppliers in their capacities as such contractin the ordinary course of business;
(i) redeem, agreementpay, commitmentdischarge or satisfy any Indebtedness that has a material repayment cost, venture“make whole” amount or prepayment penalty (other than Indebtedness incurred by the Company or its direct or indirect Subsidiaries and owed to the Company or its direct or indirect Subsidiaries), lease except as required by the terms of any Contract existing as of the date hereof; provided that for such purposes costs of up to 1% of the amount of Indebtedness so redeemed, paid, discharged or management agreement involves satisfied shall not be deemed material;
(i) except as between or could reasonably be expected among the Company and/or one or more direct or indirect wholly owned Subsidiaries of the Company, incur, create, assume or otherwise become liable for any Indebtedness for borrowed money or issue or sell any debt securities or options, warrants, calls or other rights to involve the receipt or payment by acquire any debt securities of the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements Indebtedness (A) under existing credit facilities or lines of credit or commercial paper program in connection with the Ordinary Course ordinary course operations of Business);
the business or to consummate an acquisition permitted by the terms of this Agreement, or (B) Indebtedness not exceeding $50 million incurred in connection with acquisitions permitted under (g) above, and (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(iii) except in the Ordinary Course ordinary course of Businessbusiness, make any loans, advances or capital contributions to, or investments in, any other Person;
(k) (i) terminate, materially amend or modify, renew (other than automatic renewals), or waive any material rights under, any Company Material Contract or material Real Property Lease or (ii) enter into any Contract that would have been a Company Material Contract had it been entered into prior to the date of this Agreement, in each case other than (A) in the ordinary course of business or (B) to take any of the actions permitted by this Section 5.1;
(l) amend, modify or extend, in each case in any material respect, any existing Labor Agreement, or enter into any new agreement or arrangement that would be a Labor Agreement if it had been in effect on the date of this Agreement, except (i) as required by Law or as required pursuant to an applicable Contract in effect as of the date of this Agreement or (ii) where such actions are made in the ordinary course of business on terms that do not impose any additional material obligations;
(m) make any material change to its methods of financial accounting, except as required by IFRS (or any interpretation thereof) or a Governmental Authority or quasi-Governmental Authority;
(n) make any capital expenditures in an aggregate amount that exceeds 10% of the budgeted amounts set forth in Section 5.1 of the Company Disclosure Letter for the respective periods set forth therein;
(o) cancel, forfeit, fail to renew, fail to continue to prosecute, abandon or allow to lapse (except with respect to patents expiring in accordance with their terms) any material Company Owned Intellectual Property Rights;
(p) (i) change any material aspect of its method of Tax accounting, (ii) file any material amendment to a material Tax Return, (iii) settle or compromise any audit or Proceeding with respect to material pending Tax matters, (iv) agree to an extension or threatened suit, action waiver of the statute of limitations with respect to material Taxes or claim, other than settlements (v) surrender any right to claim a material Tax refund;
(q) merge or compromises requiring payments by consolidate the Company or any of its Subsidiaries with any Person or adopt a plan of no more complete or partial liquidation, dissolution, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than (i) in connection with acquisitions permitted under (g) above or (ii) solely among direct or indirect wholly owned Subsidiaries of the Company and so long as such transaction would not be adverse in any material respect to Parent or Merger Sub and would not reasonably be expected to prevent, impede or delay the consummation of any of the Merger or the other transactions contemplated by this Agreement;
(r) release, compromise, assign, settle or agree to settle any Proceeding, other than settlements that result solely in monetary obligations of the Company or its Subsidiaries (without the admission of wrongdoing or a nolo contendere or similar plea, the imposition of injunctive or other equitable relief, or restrictions on the future activity or conduct on or by Parent, the Company or any of their respective Subsidiaries) of an amount not greater than $100,000 individually and $500,000 per month 10 million in the aggregate;
(js) payterminate, discharge cancel or satisfy let lapse, in each case voluntarily, a material existing insurance policy covering the Company and its Subsidiaries and their respective properties, assets and businesses, unless substantially concurrently with such termination, cancellation or lapse, replacement policies underwritten by reputable insurance companies providing coverage at least substantially equal in all material respects to the coverage under the terminated, canceled or lapsed policies, as applicable, are entered into;
(t) announce, implement or effect any facility closing;
(u) discontinue any material claimsline of business; or
(v) commit to, liabilities authorize or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against inadopt any resolutions approving, or contemplated byannounce an intention to do, any of the foregoing. Notwithstanding the foregoing, nothing in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the business or operations of the Company or its Subsidiaries at any time prior to the Effective Time, and the Company and its Subsidiaries shall not be required to violate any Law. Prior to the Effective Time, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses shall exercise, consistent with the terms and other cash incentive compensation in respect conditions of calendar year 2016 to the Persons this Agreement, complete control and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;supervision over their own business and operations.
Appears in 1 contract
Samples: Merger Agreement (International Flavors & Fragrances Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement hereof to the earlier to occur of (i) the date consummation of the termination of Offer, except as Purchaser shall otherwise agree in writing, as required by applicable law, or as otherwise contemplated by this Agreement or (ii) the Effective TimeAgreement, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business shall conduct their respective businesses in the regular and ordinary course andcourse, to consistent with past practice. Further, the extent consistent therewith, Company shall use its reasonable best efforts to preserve intact the business organization of the Company and each of its current business organizationSubsidiaries, to keep available the services of its current and their present officers and key employees in good standing, and to preserve its the goodwill of those having business relationships with customers, suppliers it and others having business dealings with itits Subsidiaries. Without limiting the generality of and in addition to the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Company Disclosure SchedulesLetter hereto or as otherwise provided in this Agreement, and subject prior to the provisions consummation of Section 7.5 and Article IXthe Offer, neither the Company shall not, and shall cause each nor any of its Subsidiaries not towill, without the prior written consent of Parent (which shall not be unreasonably withheld):
Purchaser: (a) amend its charter or by-laws; (xb) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities, except by the Company in connection with the exercise of employee options granted and outstanding before the date of this Agreement; (c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect of, of its capital stock or redeem or otherwise acquire any of its capital stock, securities or otherwise make any payments securities of its subsidiaries; PROVIDED that the Company may pay to its stockholders in their capacity as such, other than holders of the Shares the regular quarterly dividend of not greater than $.04 0.16 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of previously declared by the Company, including foreign Subsidiariesthe record date and payment date for which have previously been fixed by the Board as December 2, which are required or may be required under the existing terms of borrowings or indebtedness)1996 and January 2, (y) except as contemplated by this Agreement1997, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
respectively; (d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in natureincur or assume any material long-term debt or, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of the normalbusiness consistent with past practice under existing lines of credit, dayincur or assume any material short-to-day operations term debt; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for any material obligations of any other person except wholly owned Subsidiaries of the CompanyCompany in the ordinary course of business and consistent with past practices; and
or (iviii) does not require authorization by make any material loans, advances or capital contributions to, or investments in, any other person (other than loans or advances to the Company’s board of directors ('s Subsidiaries and customary loans or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is advances to employees in accordance with the authority delegated to the person making the decision or taking the action.
past practices); (e) except to the extent required by contractual commitments existing on the date hereofenter into, selladopt or materially amend any bonus, lease or otherwise dispose ofprofit sharing, or agree to sellcompensation, lease or otherwise dispose ofseverance, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthtermination, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsstock option, inventorystock appreciation right, supplies and obsolete assetsrestricted stock, (i) amend or otherwise modifyperformance unit, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;22
Appears in 1 contract
Samples: Merger Agreement (Clorox Co /De/)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to occur Section 8.1, except (a) as may be required by Law, (b) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (c) as may be expressly required or permitted pursuant to this Agreement, or (d) as set forth in Section 6.1 of the Company Disclosure Letter, (ix) the date business of the termination Company and its Subsidiaries shall be conducted in the ordinary course of this Agreement or (ii) the Effective Time, the Company shallbusiness, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, the Company shall use its commercially reasonable best efforts to preserve substantially intact the material components and assets of its current business organization, keep available the services of and to preserve in all material respects its current officers and present relationships with key customers, suppliers, employees and preserve its relationships other persons with customers, suppliers which it has material business relations; and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (y) the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) amend or otherwise change the articles of incorporation or bylaws of the Company (x) declare, set aside or pay any dividends on, such equivalent organizational or make any other actual, constructive or deemed distributions in respect of, governing documents of any of its Subsidiaries);
(b) split, combine, reclassify, redeem, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests or rights;
(c) issue, sell, pledge, dispose, encumber or grant any shares of its or its Subsidiaries’ capital stock, or otherwise make any payments to its stockholders in their capacity as suchoptions, warrants, convertible securities or other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance rights of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise kind to acquire any shares of its or its Subsidiaries’ capital stock except (i) in connection with the Rights Agreement and (ii) for transactions among the Company and its direct or indirect wholly owned Subsidiaries or among the Company’s direct or indirect wholly owned Subsidiaries; provided, however, that the Company may (a) issue shares of Company Common Stock upon the exercise of any vested Company Option, or payment of any Company Stock Unit that becomes vested, in either case as is outstanding as of the date hereof and (b) subject to Section 6.2(e), (i) reduce the exercise price per share of each outstanding Company Option and (ii) treat outstanding Company Stock Units as outstanding shares of Common Stock for purposes of participating in the Spin-Off;
(d) declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than (i) dividends paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Company and (ii) the distribution of Covisint common stock pursuant to and in accordance with the Spin-Off Agreements;
(e) except as required pursuant to Company Benefit Plans listed on Section 4.12(a) of the Company Disclosure Letter or written offer letters for newly hired or promoted employees entered into in the ordinary course of business (in each case whose base salary is less than $250,000 annually), (A) materially increase the compensation payable or to become payable or benefits provided or to be provided to (x) any member of the Company’s board of directors, or (y) any current or former employees or independent contractors of the Company or any of its Subsidiaries, except in the ordinary course of business of the Company consistent with past practice, (B) except as requested pursuant to Company Benefit Plans listed on Section 4.12(a) of the Company Disclosure Letter applicable to newly hired employees hired to fill vacancies in the ordinary course of business of the Company, grant the opportunity to participate in any severance or termination pay plans or (C) establish, adopt, enter into or materially amend any Company Benefit Plan (or any arrangement which, if in existence as of the date hereof, would constitute a Company Benefit Plan), plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees of the Company or any of its Subsidiaries or any other securities thereof of their respective beneficiaries;
(f) implement any employee layoffs that would require notice under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any rightssimilar foreign state or local Law (collectively, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options“WARN Act”);
(bg) acquire (x) issueincluding by merger, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoconsolidation, or acquisition of stock or assets), except in respect of any rightsmerger, warrants consolidation, business combination among the Company and its wholly owned Subsidiaries or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of among the Company, including foreign ’s wholly owned Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or limited liability company, other business organization or any division thereof or otherwise acquire material amount of assets thereof, or agree to acquire sell, lease, license (other than any assets that have a value in excess of $100,000 individually nonexclusive licenses or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken immaterial exclusive licenses granted in the ordinary course of the normalbusiness), day-to-day operations abandon, permit to lapse or expire or otherwise subject to a Lien other than a Permitted Lien or otherwise dispose of any material properties, rights (including material Company Intellectual Property Rights) or assets of the Company; and
Company or its Subsidiaries other than (iv1) does not require authorization by sales of inventory in the Company’s board ordinary course of directors business consistent with past practice, (or committee 2) pursuant to agreements existing as of the board date hereof and set forth on Section 6.1(g) of directorsthe Company Disclosure Letter or (3) and does not require any other separate or special authorization entered into after the date hereof in the ordinary course of any nature (that is, is business consistent with past practice in accordance with the authority delegated to the person making the decision or taking the action.terms of this Agreement and involving consideration less than $1,000,000;
(eh) except disclose any trade secret or other material confidential information to any Person outside of the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose ofordinary course of business consistent with past practice;
(i) incur, or agree to sell, lease or otherwise dispose amend in any material respect the terms of, any indebtedness for borrowed money for any of its assets that have Subsidiaries, or assume or guarantee any such indebtedness for any Person (other than a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthSubsidiary), except sales for indebtedness incurred (i) under the Company’s existing credit facilities (provided the Company shall not be permitted to increase the borrowing capacity existing as of inventory the date of this Agreement under such existing credit facilities, including by exercising any accordion options) or obsolete assets (ii) pursuant to agreements in effect prior to the Ordinary Course execution of Businessthis Agreement and set forth in Section 4.16(a) of the Company Disclosure Letter;
(fj) enter into, modify, amend or terminate (1) any Company Material Contract other than in the ordinary course of business or (2) any Contract which if so entered into, modified, amended or terminated would (x) have a Company Material Adverse Effect, (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of the transactions contemplated by this Agreement;
(k) make any material change to its methods of accounting in effect at March 31, 2014, except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend as required by GAAP (or otherwise modifyany interpretation thereof), Regulation S-X or terminate, a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any material contract, agreement or commitmentsimilar organization), (ii) to permit the audit of the Company’s financial statements in compliance with GAAP or (iii) as required by a change in applicable Law;
(l) adopt or enter into any joint venturea plan of complete or partial liquidation, lease or management agreement dissolution, recapitalization or other reorganization (other than the Merger);
(m) settle or compromise any litigation other than settlements or compromises of litigation where the amount paid (less the amount reserved for such matters by the Company or otherwise covered by insurance) in settlement or compromise, in each case, does not exceed the amount set forth in Section 6.1(m) of the Company Disclosure Letter;
(n) other than in the ordinary course of business or consistent with past practice, make or change any material Tax election, change any material method of Tax accounting, settle or compromise any material Tax liability, file any material amended Tax Return, enter into any closing agreement with respect to any material Tax or surrender any right to claim a refund for a material amount of Tax, if such election, change, settlement, compromise, amendment, agreement, or surrender would have the effect of materially increasing the Tax liability of the Company or its Subsidiaries or materially decreasing any Tax attribute of the Company or its Subsidiaries existing at the Effective Time;
(o) take any action that would reasonably be expected to result in any of the conditions set forth in Article VII not being satisfied or that would impair the ability of the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation;
(p) make any loans, advances or capital contributions to or investments in any other Person (other than the Company or any direct or indirect Subsidiary of the Company);
(q) hire any new employees other than non‑officer employees in the ordinary course of business consistent with past practice;
(r) terminate the employment of any officer of the Company or any of its Subsidiaries ifor any employee of the Company or any of its Subsidiaries, in each casecase whose annual base salary exceeds $250,000 other than for good reason or for reasonable cause;
(s) incur or commit to incur any capital expenditures, such contractor any obligations or liabilities in connection therewith that, agreementindividually or in the aggregate, commitmentare in excess of $500,000, ventureother than any capital expenditure (or series of related capital expenditures) consistent in all material respects with the Company’s annual capital expenditure budget for periods following the date of this Agreement, lease as provided to Parent, or management delay any material capital expenditures;
(t) waive, release, grant or transfer any right of material value, other than in the ordinary course of business consistent with past practice, or waive any material benefits of, or agree to modify in any material adverse respect, or, subject to the terms hereof, fail to enforce, or consent to any material matter with respect to which its consent is required under, any material confidentiality, standstill or similar agreement involves or could reasonably be expected to involve the receipt or payment by which the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)is a party;
(gu) maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice;
(v) enter into any transaction that could give rise to a disclosure obligation as a “listed transaction” under Section 6011 of the Code and the regulations thereunder;
(w) 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 under the Exchange Act that would be required to be disclosed under such Item 404;
(x) except as contemplated grant any material refunds, credits, rebates or other allowances by Section 7.11 hereof the Company to any end user, customer, reseller or for borrowings incurred distributor, in each case, other than in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000business;
(hy) except as may be required as a result enter into any new line of a change in law or in U.S. GAAP, change any business outside of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesexisting business segments;
(iz) except in the Ordinary Course communicate with employees of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month regarding the compensation, benefits or other treatment that they will receive in connection with the aggregate;
Merger, unless any such communications are consistent with prior directives or documentation provided to the Company by Parent (j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated bywhich case, the Company Financial Statements (or shall provide Parent with prior notice of and the notes thereto) or incurred in the Ordinary Course of Business or relating opportunity to matters expressly permitted by clauses (d) or (ereview and comment upon any such communications), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;; or
(kaa) (x) increase in enter into any manner the compensation and employee benefits of agreement to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Compuware Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement and the Effective Time or the date, if any, on which this Agreement is terminated pursuant to the earlier to occur of Section 8.1, except (i) the date of the termination of as required by Law, (ii) as consented to in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) expressly permitted pursuant to this Agreement or (iiiv) as set forth in Section 6.1 of the Effective TimeCompany Disclosure Schedule, the business of the Company shalland its subsidiaries shall be conducted only in, and such entities shall cause each not take any action except in, the ordinary course of its Subsidiaries to, business and in a manner consistent with past practice in all material respects carry on respects; and the Company and its business in the regular and ordinary course and, to the extent consistent therewith, subsidiaries shall use its their commercially reasonable best efforts to preserve substantially intact its current the Company's business organization, to keep available the services of its current officers those of their present officers, employees, insurance producers and employees and preserve its relationships with customers, suppliers and others having business dealings with itconsultants who are integral to the operation of their businesses as presently conducted. Without limiting the generality of the foregoing, foregoing and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions applicable subsection of Section 7.5 and Article IX, 6.1 of the Company shall notDisclosure Schedule, and shall cause each of its Subsidiaries not toduring the period specified in the preceding sentence, without the prior written consent of Parent Buyer (which consent shall not be unreasonably withheld):, delayed or conditioned), the Company will not and will not permit any of its subsidiaries to:
(a) amend, waive or otherwise change, in any material respect, the Amended and Restated Certificate of Incorporation or By-Laws of the Company or such equivalent organizational documents of any of its subsidiaries;
(xb) except as otherwise contemplated in Section 6.1(e) of this Agreement, with respect to options of the Company, issue, sell, pledge, dispose, encumber or grant any shares of its or its subsidiaries' capital stock or other ownership or voting interests, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its subsidiaries' capital stock or other ownership or voting interests provided, however that the Company may issue shares upon exercise of any Company Option outstanding as of the date hereof or as may be granted after the date hereof under this Section 6.1;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock, property or otherwise, with respect to, or make directly or indirectly redeem, purchase or repurchase any other actual, constructive shares of the Company's or deemed distributions in respect of, any of its subsidiaries' capital stockstock or other securities or obligations convertible into or exchangeable or exercisable for any shares of its or its subsidiaries' capital stock or any rights, warrants or otherwise make options to acquire any payments to its stockholders in their capacity as suchsuch shares, other than the regular quarterly dividend Special Dividend and dividends paid by any subsidiary of not greater than $.04 per Share the Company to the Company or any wholly-owned subsidiary of the Company; provided that, subject to applicable law, the Company shall be permitted to declare and pay the Special Dividend out of surplus available at or prior to the Effective Time;
(d) except as required pursuant to Company Benefit Plans in effect as of the date hereof, or as otherwise required by Law, (i) increase the compensation or other benefits payable or to become payable to stockholders directors or officers, or materially increase the compensation or other benefits payable or to become payable to employees in the aggregate, of record on a date no earlier than March the Company or any of its subsidiaries except in the ordinary course of business consistent with past practices (including, 2017for this purpose, the normal salary, bonus and equity compensation review process conducted each year), (yii) grant any severance or termination pay to, or enter into any severance agreement with any director, officer or employee of the Company or any of its subsidiaries, other than in the ordinary course of business consistent with past practice, (iii) enter into, amend in any material respect or terminate any employment agreement with any employee or officer of the Company (except to the extent necessary to replace a departing employee, except for entering into or terminating employment agreements terminable on less than 30 days' notice without penalty, and except for extension of employment agreements without material modification in the ordinary course of business consistent with past practice), (iv) establish, adopt, enter into any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries; or (v) increase the benefits under, establish or adopt, or materially amend or modify any Company Benefit Plan (or any plan, agreement or arrangement that would be a Company Benefit Plan once so established or adopted), except in each case in the ordinary course of business consistent with past practice;
(e) grant, confer or award as may be required under employment agreements executed prior to the date hereof, options, convertible securities, restricted stock, restricted stock units or other rights to acquire any of its or its subsidiaries' capital stock or take any action to cause to be vested or exercisable any otherwise unvested or unexercisable option or other equity-based award under any Company Stock Plan (except as otherwise provided by the terms of any unvested or unexercisable options or other equity-based award outstanding on the date hereof or otherwise permitted to be granted under clause A or B below), other than (A) grants of options to be made in accordance with the Company’s customary schedule, not to exceed 100,000 options in any 3-month period and (B) customary grants made to newly hired employees and with respect to promotions, in each case in the ordinary course of business, not to exceed 20,000 options in any 3-month period;
(f) acquire, including by merger, consolidation, any other form of business combination, acquisition of stock or assets, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets in connection with acquisitions or investments with a purchase price in excess of $3 million individually or $6 million in the aggregate;
(g) incur, create, assume, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), make a loan to any third party or guarantee any such indebtedness for any person (other than a wholly owned Company subsidiary) except for indebtedness (i) incurred under the Company's existing credit facilities described on Section 6.1(g) of the Company Disclosure Schedule in the ordinary course of business consistent with past practice or (ii) as otherwise required in the ordinary course of business consistent with past practice, in the case of each of clauses (i)-(ii), in an aggregate principal amount not to exceed $20 million, or (iii) as described on Section 6.1(g)(iii) of the Company Disclosure Schedule;
(h) enter into, modify, amend, terminate or waive any right under any Company Material Contract with a term longer than one year which cannot be terminated without payment of a penalty in excess of $250,000 upon notice of sixty (60) days or less other than in the ordinary course of business, consistent with past practice;
(i) make any material change to its methods, policies or procedures of accounting in effect at December 15, 2006, except (i) as required by GAAP, Regulation S-X of the Exchange Act or as required by a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization), (ii) to permit the audit of the Company's financial statements in compliance with GAAP, (iii) as required by a change in applicable Law or (iv) as disclosed in the Company SEC Documents filed prior to the date hereof;
(j) make any material Tax election except in the ordinary course of business consistent with past practice or change any material Tax election, settle or compromise any material Tax controversy or file any material amended Tax Returns;
(k) adjust, split, combine combine, recapitalize or reclassify any of its capital stock 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 (z) purchasestock, redeem or otherwise acquire except for any shares of capital stock such transaction by a wholly owned subsidiary of the Company or any which remains a wholly owned subsidiary after consummation of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)transaction;
(bl) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber make any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a expenditures having an aggregate value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company15 million;
(iim) with respect to sales of inventorywaive, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months andrelease, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Businessassign, settle or compromise any material pending or threatened suitclaim, action or claimproceeding, other than waivers, releases, assignments, settlements or compromises requiring payments by that involve only the Company or any payment of its Subsidiaries monetary damages not in excess of no more than $100,000 individually and $500,000 per month 10 million in the aggregate;
(j) aggregate or otherwise pay, discharge or satisfy any material claims, liabilities or obligationsobligations in excess of such amount, in each case, other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business consistent with past practice;
(n) adopt a plan of liabilities reflected complete or reserved against inpartial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or contemplated byother reorganization;
(o) enter into any "non-compete," right of first refusal or similar agreement that would restrict the business of the Surviving Corporation or its subsidiaries following the Effective Time or that would in any way restrict the business of Buyer or its Affiliates or take any action that may impose new or additional material regulatory requirements on Buyer or any of its Affiliates;
(p) sell, the Company Financial Statements lease, license, transfer, exchange or swap, mortgage or otherwise encumber (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (eincluding securitizations), or arising from the Transactionssubject to any Lien (other than Permitted Liens) or otherwise dispose of any material portion of its properties, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateassets or rights;
(kq) (x) increase in any manner the compensation and employee benefits sell, transfer, license, abandon, cancel, let lapse, fail to renew, fail to continue to prosecute, protect, or defend, or otherwise dispose of any of its directors, executive officers and other key employees, hire any new employees (material Owned Intellectual Property Rights other than to replace an employee whose employment has terminated)in the ordinary course of business, or pay consistent with past practice; or
(r) authorize, commit, enter into any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance otherwise agree or change in control agreement with or for the benefit of make any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments commitment to employment agreements required to cause such agreements to not be subject to Section 409A do any 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Bisys Group Inc)
Conduct of Business by the Company Pending the Merger. Except ----------------------------------------------------- as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and consistent with past practice, including with respect to casino credit policies;
(xb) not (i) amend or propose to amend their respective articles of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or borrowings under the existing credit facilities of the Company or of any of its subsidiaries up to the existing borrowing limit on the date hereof, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed $75,000,000, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Option Plans, (iii) except as disclosed in Section 5.01(d)(i) of the Company Disclosure Schedule, make any acquisition of any assets or any businesses other than expenditures for current assets in the ordinary course of its Subsidiaries business and expenditures for fixed or any other securities thereof or any rightscapital assets in the ordinary course of business, warrants or options to (iv) without Parent's consent, acquire any such shares or other securities gaming property in the State of Colorado, (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance (A) sales of shares upon the exercise of Options and for pledges businesses or assets disclosed in Section 5.01 of the stock Company Disclosure Schedule, (B) pledges or encumbrances pursuant to Existing Credit Facilities or other permitted borrowings, (C) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the buyer of such real estate, assets or facilities) to non-affiliates of the Subsidiaries Company of less than $100,000 in each such case and $500,000 in the Companyaggregate, including foreign Subsidiaries, which are required (D) sales or dispositions of businesses or assets as may be required under by applicable law, and (E) sales or dispositions of assets in the existing ordinary course or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by the terms of borrowings or indebtedness), (y) except as contemplated by this Agreement;
(f) not enter into, amend, waive modify or otherwise modify renew any employment, consulting, severance or similar agreement with, or grant any salary, wage or other increase in compensation or increase in any employee benefit to, any director or officer of the terms Company or of any such rightsof its subsidiaries, warrants or options, or except (zi) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as for changes that are required by contractual commitments applicable law, (ii) to satisfy obligations existing on as of the date hereof, acquire or agree (iii) in the ordinary course of business consistent with past practice;
(g) not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as may be required by applicable law or by the terms of contractual obligations existing as of the date hereof, including any collective bargaining agreement;
(h) not make expenditures, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to acquiremake expenditures, except for purchases of raw materials(i) expenditures which the Company or its subsidiaries are currently contractually committed to make, supplies, and inventory (ii) other expenditures not exceeding $250,000 individually or $500,000 in the Ordinary Course aggregate, (iii) for emergency repairs and other expenditures necessary in light of Businesscircumstances not anticipated as of the date of this Agreement which are necessary to avoid significant disruption to the Company's business or operations consistent with past practice (and, by merging or consolidating withif reasonably practicable, after consultation with Parent), or (iv) for repairs and maintenance in the ordinary course of business consistent with past practice. With respect to the subject matter of this paragraph (h), if the Company requests approval of Parent to exceed the limits set forth herein, Parent shall respond to such request and grant or withhold approval promptly following receipt of such request;
(i) not make, change or revoke any material Tax election unless required by purchasing a substantial portion law or make any agreement or settlement with any taxing authority regarding any material amount of Taxes or which would reasonably be expected to materially increase the obligations of the assets of Company or equity in, the Surviving Corporation to pay Taxes in the future; and
(j) not settle or by compromise any other manner, any business litigation to which the Company or any corporationCompany subsidiary is a party or with respect to which the Company or any Company subsidiary may have or incur liability, partnership, association or other business organization or division thereof or otherwise acquire or agree at an aggregate cost to acquire any assets that have a value the Company in excess of $100,000 individually 250,000 with respect to any action or claim or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured all applicable actions and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, claims in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;.
Appears in 1 contract
Samples: Merger Agreement (Raceland Truck Plaza & Casino LLC)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from the date of this Agreement to and continuing until the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, unless Parent shall otherwise agree in writing, the Company shall, shall conduct its business and shall cause each the businesses of its Subsidiaries tosubsidiaries to be conducted only in, in all material respects carry on and the Company and its business in subsidiaries shall not take any action except in, the regular and ordinary course and, to of business and in a manner consistent with past practice; and the extent consistent therewith, Company shall use its all reasonable best efforts to preserve substantially intact the business organization of the Company and its current business organizationsubsidiaries, to keep available the services of its current officers and the present officers, employees and consultants of the Company and its subsidiaries and to preserve the present relationships of the Company and its relationships subsidiaries with customers, suppliers and others having other persons with which the Company or any of its subsidiaries has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement, neither the Company nor any of its subsidiaries shall, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or as set forth in the Disclosure SchedulesEffective Time, and subject directly or indirectly do, or propose to do, any of the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, following without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) amend or otherwise change the Certificate of Incorporation or By-Laws of the Company or similar organizational documents of any of its subsidiaries;
(xb) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) in the Company or any of its subsidiaries (except for (i) the issuance of shares of Company Common Stock issuable pursuant to Stock Options which were granted under the Company Stock Option Plans and are outstanding on the date hereof and (ii) grants of Stock Options under the Company Stock Option Plans for the purchase of a maximum of 25,000 shares of Company Common Stock granted to the individuals identified in Section 4.1(b) of the Company Disclosure Schedule).
(c) sell, pledge, dispose of or encumber any assets of the Company or any of its subsidiaries (except for (i) sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $10,000,000 in the aggregate);
(i) declare, set aside aside, make or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect of, of any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than regular quarterly cash dividends of $0.29 per share in accordance with past practice (and provided that if the Effective Time shall occur on a date in any quarter which is subsequent to the record date for the regular quarterly cash dividend on Parent Common Stock and prior to the customary record date for the regular quarterly cash dividend on the Company Common Stock, the Company shall be permitted to declare and pay its dividend in the customary amount for such quarter prior to the Effective Time), except that a wholly owned subsidiary of not greater than $.04 per Share payable the Company may declare and pay a dividend to stockholders of record on a date no earlier than March , 2017its parent, (yii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities or property in respect of, in lieu of or in substitution for shares of its capital stock stock, or (ziii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire acquire, or permit any subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, shares of Company Common Stock or any option, warrant or right, directly or indirectly, to acquire shares of Company Common Stock, or provide that upon the exercise or conversion of any such option, warrant or right the holder thereof shall receive cash, or propose to do any of the foregoing;
(i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof other than those listed on Section 4.1(e) of the Company Disclosure Schedule; (ii) incur any indebtedness for borrowed money or issue any debt securities, except for short-term, working capital stock and commercial paper borrowings not in excess of $800 million in the aggregate at any one time outstanding incurred in the ordinary course of business consistent with past practice and except for intercompany indebtedness between the Company and any of its wholly owned subsidiaries or between such wholly owned subsidiaries, or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any person or, except in the ordinary course of business consistent with past practice, make any loans or advances; (iii) enter into or amend any material contract or agreement (except as described on Section 4.1(e) of the Company Disclosure Schedule); (iv) authorize any capital expenditures or purchase of fixed assets which are, in the aggregate, in excess of $10,000,000 for the Company and its subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 4.1(e);
(i) increase the compensation payable or to become payable to its officers or employees, except for increases in salary or wages of employees of the Company or its subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice; (ii) grant any severance or termination pay to, or enter into any employment or severance agreement with any director, officer or other employee of the Company or any of its Subsidiaries subsidiaries; or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in 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 ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization benefit of any nature (that iscurrent or former directors, is in accordance with the authority delegated to the person making the decision officers or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereofemployees, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries ifexcept, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably as may be expected to involve the receipt or payment required by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)law;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAPgenerally accepted accounting principles, take any action to change any accounting policies or procedures (including, without limitation, procedures with respect to revenue recognition, payments of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results accounts payable and collection of operations of the Company and its Subsidiariesaccounts receivable);
(ih) except in the Ordinary Course of Business, make any material tax election inconsistent with past practice or settle or compromise any material pending federal, state, local or threatened suit, action foreign tax liability or claim, other than settlements or compromises requiring payments by the Company or any agree to an extension of its Subsidiaries a statute of no more than $100,000 individually and $500,000 per month in the aggregatelimitations;
(ji) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, in the financial statements contained in the Company Financial Statements (or SEC Reports filed prior to the notes thereto) date of this Agreement or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses business and consistent with past practice; or
(dj) or (e)take, or arising from the Transactionsagree in writing or otherwise to take, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees the actions described in Sections 4.1 (other than to replace an employee whose employment has terminated)a) through (i) above, or pay any pension or retirement allowance not required by law or action which would make any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Code, or, if subject to Section 409A representations or warranties of the Code, to not result Company contained in the application of the additional Tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that this Agreement untrue or incorrect or prevent the Company and any of from performing or cause the Company not to perform its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;covenants hereunder.
Appears in 1 contract
Samples: Merger Agreement (KKR Associates)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from after the date of this Agreement hereof and prior to the Closing Date or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless PalEx shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct its businesses in the ordinary and usual course and consistent with past practice;
(xb) not (i) amend or propose to amend its charter or by-laws, (ii) split, combine or reclassify its outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions described in SCHEDULE 6.1;
(c) not, except for shares issued to the Ridge Pallets, Inc. Profit Sharing Plan in connection with the transaction described in Section 7.13 hereof, issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, its capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock.
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or (B) borrowings to refinance existing indebtedness on terms comparable with or better than those at the date hereof, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock stock, (iii) take or (z) purchase, redeem fail to take any action which action or otherwise acquire any shares of capital stock of failure would cause the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities the Stockholders (except to the extent of any cash received in the Merger) to recognize gain or loss for the withholding of shares of Common Stock in connection with Taxes payable in respect federal income tax purposes as a result of the exercise consummation of Options);
the Merger, (biv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness or (v) enter into any contract, day-to-day operations agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all reasonable efforts to preserve intact its business organizations and goodwill, keep available the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any services of its assets that have a value present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with it and not engage in excess of $100,000 individually any action, directly or in excess of $500,000 in indirectly, with the aggregate during any calendar month, except sales of inventory or obsolete assets in intent to adversely impact the Ordinary Course of Businesstransactions contemplated by this Agreement;
(f) except as permitted by clauses (d) confer on a regular and (e) above frequent basis with respect one or more representatives of PalEx to raw materials, inventory, supplies report operational matters of materiality and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement the general status of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)ongoing operations;
(g) (x) not enter into or amend any employment, severance, special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees, except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) ordinary course and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) not adopt, enter into or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, health care, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any employee or retiree, except as may be required as a result of a change to comply with changes in applicable law or in U.S. GAAP, change any the ordinary course of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company business and its Subsidiaries;consistent with past practices; and
(i) except maintain with financially responsible insurance companies insurance on its tangible assets and its businesses in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually such amounts and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, such risks and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement losses as are consistent with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;past practice.
Appears in 1 contract
Samples: Merger Agreement (Palex Inc)
Conduct of Business by the Company Pending the Merger. Except as The Company covenants and agrees that, prior to the Effective Time, unless Parent shall otherwise expressly agree in writing or except in connection with the transactions contemplated by this Agreement or Agreement:
(a) Except as set forth in the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date SECTION 5.1 of the termination of this Agreement or (ii) the Effective TimeCompany Disclosure Letter, the businesses of the Company shalland the Company Subsidiaries shall be conducted only in the ordinary and usual course of business and consistent with past practices, and the Company and the Company Subsidiaries shall cause each of its Subsidiaries to, in use all material respects carry on its reasonable efforts to maintain and preserve intact their respective business in the regular and ordinary course andorganizations, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current their respective officers and employees and preserve its to maintain significant beneficial business relationships with suppliers, contractors, distributors, customers, suppliers licensors, licensees and others having business dealings relationships with it. ; and
(b) Without limiting the generality of the foregoingforegoing SECTION 5.1(A), and except as otherwise expressly contemplated by this Agreement or as set forth in SECTION 5.1 of the Company Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXLetter, the Company shall notnot directly or indirectly, and shall cause each not permit any of its the Company Subsidiaries not to, without do any of the prior written consent of Parent (which shall not be unreasonably withheld):following:
(ai) acquire, sell, lease, transfer or dispose of any assets or securities or enter into any material commitment or transaction, in each case out of the ordinary course of business consistent with past practice;
(xii) amend or propose to amend its certificate of incorporation or bylaws or, in the case of the Company Subsidiaries, their respective constituent documents;
(iii) split, combine or reclassify any outstanding shares of, or interests in, its capital stock;
(iv) declare, set aside or pay any dividends ondividend or distribution, payable in cash, stock, property or make any other actual, constructive or deemed distributions in otherwise with respect of, to any of its capital stock;
(v) redeem, purchase or otherwise make acquire or offer to redeem, purchase or otherwise acquire any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any shares of its capital stock or issue any options, warrants or authorize rights to acquire capital stock of the issuance Company;
(vi) except for the Company Common Stock issuable upon exercise of options outstanding on the date hereof and except for up to 10,000 shares of Company Common Stock issuable under the OEA, Inc. Directors Compensation Plan and the OEA, Inc. 1997 Employee Stock Purchase Plan, issue, sell, pledge, dispose of or encumber, or authorize, propose or agree to the issuance, sale, pledge or disposition or encumbrance by the Company or any of the Company Subsidiaries 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, its capital stock of any class, or any other securities in respect of, in lieu of of, or in substitution for shares any class of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock of outstanding on the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)date hereof;
(bvii) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any existing indebtedness for borrowed money or incur any indebtedness for borrowed money or issue any debt securities, except indebtedness incurred in the ordinary course of business, but only if the amount of such rightsindebtedness, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (when added to all other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms indebtedness of the applicable equity incentive plan or agreement governing Company then outstanding (determined in accordance with GAAP), does not exceed the applicable Company Stock Option)sum of (a) the total amount of indebtedness outstanding on January 31, 2000, and (b) $10,000,000;
(cviii) amend its Certificate assume, guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of Incorporation or By-laws or any other organizational documentsperson, or alter through merger, liquidation, reorganization, restructuring make any loans or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquireadvances, except to the Company Subsidiaries or except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value those not in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyaggregate;
(iiix) authorize, recommend or propose any material change in its capitalization, or any release or relinquishment of any material contract right;
(x) take any action with respect to sales the grant of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are or increase in excess of requirements for customer ordersany severance or termination pay;
(iiixi) is taken adopt or establish any new employee benefit plan or amend in any material respect any employee benefit plan or increase the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (compensation or committee of the board of directors) and does not require any other separate or special authorization fringe benefits of any nature employee (that is, is in accordance with the authority delegated to the person making the decision other than non-officers and non-management personnel) or taking the action.
(e) except to the extent pay any material benefit not required by contractual commitments any existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessemployee benefit plan;
(fxii) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) enter into or amend or otherwise modify, or terminate, in any material contractrespect any employment, consulting, severance or indemnification agreement entered into or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment made by the Company or any of its the Company Subsidiaries with any of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof their respective directors, officers, agents, consultants or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceemployees, incur or any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases collective bargaining agreement or other similar instruments, obligation to any labor organization or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit employee incurred or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments entered into by the Company or any of its Subsidiaries the Company Subsidiaries, except for such amendments to consulting agreements entered into in the ordinary course;
(xiii) make or change any material tax election, enter into any closing agreement relating to taxes, consent to any waiver of the statute of limitations for any claim or assessment relating to taxes, or settle or compromise any liability for taxes or compromise, settle or otherwise resolve other litigation or legal proceedings involving a payment of no more than $100,000 individually and $500,000 per month 250,000 in any one case by or to the aggregateCompany or any of the Company Subsidiaries;
(jxiv) pay, discharge make or satisfy commit to make capital expenditures in excess of 10% (ten percent) over the aggregate budgeted amount set forth in the Company's fiscal 2000 capital expenditure plan previously provided to Parent;
(xv) adopt any material accounting method relating to taxes or make any material changes in its reporting for taxes or accounting procedures other than as required by GAAP or applicable law;
(xvi) other than in the ordinary course of business, pay or discharge any claims, liens or liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no involving more than $100,000 individually and or $500,000 per month in the aggregate, which are not reserved for on the balance sheet included in the Company Financial Statements;
(kxvii) write off any accounts or notes receivable except in the ordinary course of business;
(xxviii) increase knowingly take, or agree to commit to take, any action that would or is reasonably likely to result in any manner of the compensation and employee benefits conditions to the Offer or any conditions of the Merger not being satisfied, or would make any representation or warranty of the Company contained in herein inaccurate in any material respect at, or as of any of its directorstime prior to, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated)the Effective Time, or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for that would materially impair the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A ability of the CodeCompany, Parent, Merger Sub or the holders of Shares to consummate the Offer or the Merger in accordance with the terms hereof or materially delay such consummation; or
(xix) enter into or modify any contract, if subject agreement, commitment or arrangement to Section 409A do any 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Oea Inc /De/)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule(a) The Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of Effective Time, except (i) the date as set forth in Section 6.01(a) of the termination Company Disclosure Schedule, (ii) as contemplated or permitted by any other provision of this Agreement or (iiiii) with the Effective Timeprior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), the businesses of the Company shalland its Subsidiaries shall in all material respects be conducted only in, and the Company and its Subsidiaries shall not take any action except, in all material respects, in the ordinary course of business and in a manner consistent in all material respects with past practice, and the Company shall (and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, ) use its commercially reasonable best efforts to preserve substantially intact its current their business organization, keep available the services of its current officers organization and employees maintain and preserve its intact their current relationships with customers, suppliers suppliers, licensors, licensees, distributors and others having business dealings with it. Without limiting the generality them.
(b) By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions Section 6.01(b) of Section 7.5 and Article IX, the Company shall notDisclosure Schedule, and shall cause each as contemplated or permitted by any other provision of its Subsidiaries not to, without this Agreement or with the prior written consent of Parent (which consent shall not be unreasonably withheld):, delayed or conditioned), neither the Company nor any of its Subsidiaries shall, between the date of this Agreement and the Effective Time, do any of the following:
(ai) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;
(xii) declareissue, set aside deliver, sell, grant, pledge, dispose of or pay any dividends grant an Encumbrance on, or make any other actual, constructive or deemed distributions in respect ofpermit an Encumbrance to exist on, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance shares of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares class of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stockSubsidiaries, any other voting securities or equity equivalent or any securities convertible intoother ownership interests, or any rightsoptions, warrants warrants, convertible securities or options other rights of any kind to acquire, acquire any shares of such sharescapital stock, voting securities or convertible securities equity interests, or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the any “phantom” stock, “phantom” stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or optionsstock appreciation rights, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or Bystock-laws based units or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement similar interests of the Company or any of its Subsidiaries if(except for the issuance of Shares issuable pursuant to the exercise of Company Stock Options outstanding on the date hereof in accordance with their terms on the date hereof);
(iii) (A) sell, in each caselease, such contractlicense, agreementpledge or dispose of or (B) grant an Encumbrance on, commitmentor permit an Encumbrance to exist on, venture, lease any properties or management agreement involves other assets or could reasonably be expected to involve the receipt or payment by any interests therein of the Company or any of its Subsidiaries that are material to the Company and its Subsidiaries, taken as a whole, except for sales of $100,000 per month individually inventory and $500,000 per month used equipment in the aggregate (except for hedging arrangements ordinary course of business and in the Ordinary Course of Business)a manner consistent with past practice;
(giv) declare, set aside, make or pay any dividend, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any of the Company’s direct or indirect wholly owned Subsidiaries to the Company or any of its other wholly owned Subsidiaries;
(v) adjust, reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock, voting securities or other ownership interests or any securities convertible into or exchangeable or exercisable for capital stock, voting securities or other ownership interests;
(vi) (A) acquire, including by merger, consolidation or acquisition of stock or assets or any other business combination or by any other manner, any corporation, partnership, other business organization or any business, division or equity interest thereof; (B) except for borrowings under the Company’s existing credit facility as in effect on the date of this Agreement, incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances or capital contribution to, or investment in, any Person, except to employees in the ordinary course of business and in a manner consistent with past practice or to the Company or any wholly owned Subsidiary of the Company; or (C) authorize or make any commitments with respect to any capital expenditures in excess of the aggregate amount set forth in the budget of the Company for the calendar year 2011, set forth in Section 6.01(b)(vi) of the Company Disclosure Schedule;
(vii) modify in any material respect any accounting policies or procedures, other than as required by GAAP or Law;
(A) except as required by applicable Law, make any change (or file any such change) in any material method of Tax accounting, (B) make, change or rescind any material Tax election; (C) settle or compromise any material Tax liability or consent to any claim or assessment relating to a material amount of Taxes; (D) file any amended Tax Return; (E) file any claim for refund of a material amount of Taxes; (F) enter into any closing agreement relating to a material amount of Taxes; or (G) waive or extend the statute of limitations in respect of material Taxes, in each case outside of the ordinary course of business and, to the extent applicable, in a manner consistent with past practice;
(ix) (A) abandon, disclaim, dedicate to the public, sell, transfer, assign or grant any security interest in, to or under any material Company Intellectual Property or material Company IP Agreement; (B) grant to any third party any license, or enter into any covenant not to xxx, with respect to any material Company Intellectual Property; (C) disclose or allow to be disclosed any material confidential information to any Person, other than to Persons that are subject to a customary confidentiality or non-disclosure covenant protecting against further disclosure thereof; or (D) adversely amend or modify any rights to any material Company Intellectual Property in any material respect;
(x) except as contemplated by Section 7.11 hereof required to ensure that any Plan is not then out of compliance with applicable Law or for borrowings incurred the terms of such Plan on the date hereof, (A) adopt, enter into, terminate or amend any collective bargaining agreement or similar contract or any Plan; (B) other than periodic base salary raises in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially in a manner consistent with past practicepractice or in connection with ordinary course promotions for employees below the level of Vice President, incur increase in any additional indebtedness manner the compensation, bonus or fringe or other benefits of, or pay any discretionary bonus of any kind or amount whatsoever to, any current or former Service Provider; (C) grant or pay any change-in-control, retention, severance or termination pay to, or increase in any manner the change-in-control, retention, severance or termination pay of, any current or former Service Provider; (D) grant any awards (including for this purpose grants of any indebtedness evidenced by notes, debentures, bonds, capitalized leases stock or other similar instruments, stock-based awards or secured by the removal of existing restrictions in any lien on Plans or awards made thereunder); (E) take any property, obligations under any title retention agreement and obligations under letters of credit action to fund or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in way secure the aggregate, having a value in excess payment of $100,000;
compensation or benefits under any Plan; (hF) take any action to accelerate the vesting or payment of any compensation or benefit under any Plan or awards made thereunder; or (G) except as may be required as a result of a change for continued compliance with generally accepted accounting principles in law or in U.S. GAAPthe relevant jurisdiction, materially change any actuarial or other assumption used to calculate funding obligations with respect to any Plan or change the manner in which contributions to any Plan are made or the basis on which such contributions are determined;
(xi) except as required by Law or any judgment by a court of the accounting principles competent jurisdiction, (A) pay, discharge, settle or practices used by it materially affecting the reported consolidated assetssatisfy any claims, liabilities liabilities, obligations or results of operations of litigation (absolute, accrued, asserted or unasserted, contingent or otherwise) that are material to the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligationstaken as a whole, other than the payment, discharge discharge, settlement or satisfaction in the Ordinary Course ordinary course of Business business and in a manner consistent with past practice of in accordance with their terms, of liabilities disclosed, reflected or reserved against in, or contemplated by, in the Company Financial Statements (or the notes thereto) of the Company (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the Ordinary Course ordinary course of Business business and in a manner consistent with past practice; (B) cancel any material Indebtedness; or relating (C) waive or assign any claims or rights of material value;
(xii) (A) enter into, (B) terminate or cancel, except when it may be commercially reasonable to matters expressly permitted by do so (so long as the Company consults in advance with the Company and in good faith takes Parent’s views into account with respect to any contract set forth under clauses (dv), (vii) or (eviii) in Section 4.16 of the Company Disclosure Schedule), (C) fail to exercise a right to renew on terms commercially reasonable to the Company, or arising from the Transactions(D) modify or amend in any material respect, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateany Material Contract;
(kxiii) enter into, modify, amend or terminate any contract, or waive, release or assign any material rights or claims thereunder, which if so entered into, modified, amended, terminated, waived, released or assigned would (xA) increase reasonably be expected to impair in any manner material respect the compensation ability of the Company to perform its obligations under this Agreement or (B) reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Transactions;
(xiv) enter into any contract that is material to the Company and employee benefits its Subsidiaries, taken as a whole, to the extent consummation of the transactions contemplated by this Agreement would reasonably be expected to trigger, conflict with or result in a violation of any “change of its directorscontrol” or similar provision of such contract;
(xv) authorize, executive officers and other key employeesapply for, hire or cause to be approved, the listing of Shares on any new employees stock exchange (other than SIX); or
(xvi) authorize or agree to replace an employee whose employment has terminated), or pay do any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Johnson & Johnson)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement to through the earlier to occur of (i) the date of Closing and the termination of this Agreement Agreement, except as otherwise contemplated or permitted by this Agreement, as set forth in Section 6.01 of the Company Disclosure Schedule, as required in connection with any Contagion Event, as required by applicable Law or Order, as required by any Contract as in effect as of the date of this Agreement, or with the prior written consent of Parent (iiwhich consent shall not be unreasonably withheld, delayed or conditioned), (x) the Effective Time, the Company shall, shall and shall cause each of its Subsidiaries to, to conduct their respective businesses and operations in the ordinary course of business consistent with past practices in all material respects carry on respects, (y) the Company shall and shall cause each of its business in the regular and ordinary course and, Subsidiaries to the extent consistent therewith, use its their reasonable best efforts to preserve intact its current their business organizationorganizations, keep available the services of its current officers goodwill and employees assets and to preserve its present relationships with Governmental Authorities and other key third parties, including customers, reinsurers, producers, distributors, suppliers and others having other Persons with whom the Company and its Subsidiaries have business dealings with it. Without limiting the generality of the foregoingrelationships, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (z) the Company shall not, not and shall cause each of its Subsidiaries not to, without to (it being understood that no act or omission by the prior written consent Company or any of Parent its Subsidiaries with respect to compliance with the matters specifically addressed by any provision of this clause (which z) shall not be unreasonably withhelddeemed to be a breach of clauses (x) or (y)):
(a) (x) declare, set aside aside, make or pay any dividends onor other distributions (whether in cash, stock or make any other actual, constructive or deemed distributions property) in respect of, of any of its or its Subsidiaries’ capital stock, stock or otherwise make any payments to its stockholders in their capacity as suchother equity interests, other than any dividends or distributions by a wholly owned Subsidiary of the regular quarterly dividend Company to the Company or to any other wholly owned Subsidiary of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March the Company;
(b) adjust, 2017, (y) split, combine combine, subdivide or reclassify any of its capital stock or other equity interests of the Company or any of its Subsidiaries or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for for, shares of its capital stock or other voting or equity interests of any class or series of the Company or any of its Subsidiaries;
(zc) purchaserepurchase, redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire, directly or indirectly, any shares of its or its Subsidiaries capital stock or any Company Stock Rights;
(d) issue, grant, deliver, offer, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or option, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock or other voting or equity interests of any class or series of the Company or any of its Subsidiaries;
(e) adopt any amendments to or propose to amend the Company Certificate of Incorporation or Company Bylaws or organizational documents of the Company’s Subsidiaries;
(f) purchase an equity interest in, or a substantial portion of the assets of, any Person or any division or business thereof, if the amount of the consideration paid or transferred by the Company and its Subsidiaries would exceed $500,000 for any individual transaction or $1,500,000 in the aggregate for all such transactions, or merge or consolidate with any Person, in each case, other than (i) any such action solely between or among the Company and its Subsidiaries, (ii) pursuant to the investment policies and guidelines of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for iii) the withholding acquisition of shares Investment Assets in the ordinary course of Common Stock in connection business consistent with Taxes payable in respect of the exercise of Options)past practice;
(bg) (x) issue, deliver, sell, pledgelease, transfer, license, encumber or otherwise dispose of or otherwise encumber any shares of its properties or assets (including capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d, but excluding Intellectual Property) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
than (i) is substantially consistent in nature, scope, and magnitude with the past practices sales or other dispositions of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken assets in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance business consistent with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitmentpast practice, (ii) solely of assets pursuant to the investment policies and guidelines of the Company or enter into any joint ventureof its Subsidiaries, lease or management agreement (iii) sales or other material agreement dispositions of assets utilized in the operations of the Company or its Subsidiaries the total value of which does not exceed $500,000 for any single transaction or $1,500,000 in the aggregate for all such transactions, (iv) sales or other dispositions of obsolete assets that are no longer used or useful in the conduct of the business of the Company or any of its Subsidiaries ifor (v) pursuant to Contracts in effect on the date of this Agreement (or entered into after the date of this Agreement in compliance with this Section 6.01);
(h) sell, assign, transfer, license, abandon, cancel, permit to lapse, pledge, encumber, fail to renew, maintain or pursue filed applications for or otherwise dispose of any material Intellectual Property, other than the grant of non-exclusive licenses in each casethe ordinary course of business consistent with past practice, or disclose to any Person any non-public material Intellectual Property, except in the ordinary course of business consistent with past practice pursuant to written obligations of non-disclosure and non-use;
(i) incur any indebtedness for borrowed 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 any such contractindebtedness or any debt securities of another Person, agreementor enter into any “keep well” or other agreement to maintain any financial statement condition of another Person (collectively, commitment“Indebtedness”), ventureother than (i) borrowings under the Hannover Facility not in excess of $3,000,000, lease (ii) Indebtedness incurred in connection with the refinancing of any Indebtedness existing on the date of this Agreement, (iii) Indebtedness incurred solely between the Company and any of its Subsidiaries or management agreement involves solely between its Subsidiaries, or could reasonably be expected (iv) any additional Indebtedness the total value of which does not exceed $250,000 in the aggregate;
(j) make any loans, capital contribution or advance to involve the receipt or payment by investment in any Person, other than (i) to the Company or any of its Subsidiaries or (ii) pursuant to the investment policies and guidelines of $100,000 per month individually and $500,000 per month the Company or any of its Subsidiaries as of the date hereof in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business)business consistent with past practice;
(gk) other than in connection with claims under Insurance Contracts or Reinsurance Contracts, settle any material Actions made or pending against the Company or any of its Subsidiaries, other than any settlements (i) in the ordinary course of business consistent with past practices or (ii) (xA) for amounts not to exceed, for any such settlement individually, $500,000, and for all such settlements in the aggregate, $1,500,000 and (B) that would not reasonably be likely to prohibit or materially restrict the Company and its Subsidiaries from operating their business following the Closing Date;
(l) make any material change (i) in any accounting methods, principles or practices, (ii) to the investment policies and guidelines of the Company or any of its Subsidiaries in effect on the date hereof or (iii) to any of the actuarial, underwriting, claims administration, pricing, loss control, reserving or reinsurance policies, practices or principles of any Company Insurance Subsidiary in effect on the date hereof or any material assumption underlying an actuarial practice or policy, in each case, other than as required by changes in GAAP or in SAP prescribed or permitted by the applicable insurance regulatory authorities and accounting pronouncements by the SEC, the National Association of Insurance Commissioners and the Financial Accounting Standards Board;
(m) except as contemplated required by a Benefit Plan existing and as in effect on the date hereof and set forth on Section 7.11 hereof 4.18(a) of the Company Disclosure Schedule, (i) grant any Company Stock Rights or for borrowings incurred other equity or equity-based awards in respect of the capital stock or other securities of the Company or any of its Subsidiaries to any current or former director, officer, employee or other service provider of the Company or any of its Subsidiaries, (ii) grant any increases in the Ordinary Course compensation or benefits payable or available to any current or former director, officer, employee or other service provider of Business the Company or any of its Subsidiaries, (iii) make any grant of, or increase, any severance, retention, change in control, termination or similar compensation or benefits payable to any current or former director, officer, employee or other service provider of the Company or any of its Subsidiaries, (iv) 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 compensation or benefits under any Benefit Plan, (v) establish, adopt, enter into, terminate or amend any Benefit Plan or establish, adopt or enter into any plan, agreement, program, policy or other arrangement that would be a Benefit Plan if it were in existence as of the date hereof, (vi) loan or advance any money or other property to any current or former director, officer, employee or other service provider of the Company or any of its Subsidiaries (other than routine advancement of business expenses in the ordinary course of business), or (vii) materially amend or modify any performance criteria, metrics or targets under any Benefit Plan such that, as compared to those criteria, metrics or targets under any Benefit Plan in effect as of the date of this Agreement, the performance criteria, metrics or targets would reasonably be expected to be more likely to be achieved than in the absence of such amendment or modification;
(n) (i) hire or make an offer to hire any Person to be an officer or employee of the Company or any of its Subsidiaries or engage or make an offer to engage any other service provider to provide services to any Company or any of its Subsidiaries, other than the hiring of employees or engagement of service providers with annual base pay or fee not in excess of $200,000 in the ordinary course of business consistent with past practice and on the same or substantially similar terms and conditions of employment as similarly-situated employees of the Company and its Subsidiaries and not otherwise in contravention of Section 6.01(m), (ii) promote or terminate (other than for cause) the employment or engagement of, any employee or other service provider (retroactively or otherwise), in each case, with annual base pay or fee in excess of $200,000 or (iii) affirmatively waive the restrictive covenant obligations of any current or former employee of the Company or any of its Subsidiaries;
(o) (i) enter into any collective bargaining agreement or other agreement with any labor union, works council, trade union, labor association or other employee representative organization, or (ii) recognize or certify any labor union, works council, trade union, labor association other employee representative organization, or group of employees of the Company or any of its Subsidiaries as the bargaining representative for any employees of the Company or any of its Subsidiaries;
(p) except as in the ordinary course of business consistent with past practices, (i) make, revoke or change any material Tax election, (ii) settle or compromise any material income Tax liability, (iii) file any amended material income Tax Return, (iv) fail to pay any material amount of Taxes that are due and payable (including drawdowns as permitted estimated Tax payments), (v) change an annual accounting period or change (or make a request to any Governmental Authority to change) any aspect of its method of accounting for Tax purposes, (vi) prepare or file any material income Tax Returns in a manner which is materially inconsistent with past practices (unless otherwise required by applicable Law), (vii) consent to any extension or waiver of the Credit Agreementlimitation period applicable to any Tax claim or assessment, (viii) and for hedging arrangement substantially surrender any right to claim a Tax refund, offset or other reduction in Tax liability, or (ix) enter into any Tax sharing, closing, or similar agreement in respect of any Taxes, obtain or request any Tax ruling, in each case of (i) through (ix) to the extent that doing so would reasonably be likely to result in a material incremental cost to Parent, the Company or any of its Subsidiaries after the Closing;
(q) (i) commute, materially amend or assign or waive any material rights under any Material Contract or any Reinsurance Contract, other than in the ordinary course of business consistent with past practice, incur or (ii) enter into any additional indebtedness (including for Contract that would have been a Material Contract or Reinsurance Contract had it been entered into prior to the execution of this purpose Agreement if the Company or any indebtedness evidenced by notes, debentures, bonds, capitalized leases of its Subsidiaries would be required to post collateral to secure its liabilities under such agreement or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value contract in excess of $100,000the amount required by applicable Law for the ceding company to receive full credit for the reserves ceded thereunder;
(hr) except as may be required as a result authorize, recommend, propose, enter into or adopt any plan or agreement of a change in law complete or in U.S. GAAPpartial liquidation, change dissolution, restructuring, recapitalization, merger, consolidation or other reorganization of the Company or any of its Subsidiaries;
(s) make, commit to make or authorize any capital expenditures that are in excess of (i) 110% of the accounting principles individual line items of, or practices used by it materially affecting (ii) 105% of the reported consolidated assetsaggregate amount of capital expenditures scheduled to be made in, liabilities the capital expenditure budget set forth on Section 6.01(s) of the Company Disclosure Schedule for the period indicated therein; provided, however, that the Company and its Subsidiaries shall be permitted to make emergency capital expenditures in the event that the Company determines in its reasonable judgment, after consultation with Parent, that such capital expenditures are necessary to maintain its ability to operate its businesses in the ordinary course or results for the safety of operations individuals, assets or the environment;
(i) modify, amend, terminate, assign or waive any material rights of the Company or any of its Subsidiaries under any Related Party Transaction or (ii) enter into any Related Party Transaction;
(u) enter into a new business outside of (i) the existing business of the Company and its Subsidiaries or (ii) any new business that is complementary to the existing business of the Company and its Subsidiaries;
(iv) except in the Ordinary Course of Businessmodify, settle waive, terminate or compromise voluntarily abandon, fail to renew, let lapse or otherwise change, any material pending Company Permit or threatened suit, action or claim, other than settlements or compromises requiring payments by any material insurance licenses of the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregateInsurance Subsidiaries;
(ji) payenter into any agreement or commitment for the purchase, discharge acquisition, sale, lease, sublease, license, sublicense, occupancy or satisfy other direct or indirect transfer of any real property or any interest therein (other than in the ordinary course of business consistent with past practice), (ii) acquire any fee simple title to, or interest in, real property or (iii) materially amend or modify, voluntarily terminate or rescind, exercise or decline any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against inoption, or contemplated by, the request or grant any material waiver under any Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;Lease; or
(k) (x) increase authorize, agree, in any manner the compensation and employee benefits of writing or otherwise, to take, or commit to any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change the actions described in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to this 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;6.01.
Appears in 1 contract
Samples: Merger Agreement (Vericity, Inc.)
Conduct of Business by the Company Pending the Merger. Except as Unless XxxxXxx.xxx shall otherwise expressly contemplated by this Agreement or as set forth agree in writing, the Disclosure Schedule, during Company covenants and agrees to conduct the period from Company's business between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective TimeTime in and only in, and the Company shall not take any action except in, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to of business and in a manner consistent with past practice and in accordance with applicable law; and the extent consistent therewith, Company shall use its reasonable best efforts to preserve intact its current the business organizationorganization of the Company, to keep available the services of its the current officers and officers, employees and consultants of the Company and to preserve its the current relationships with of the Company with, and the goodwill of, customers, suppliers and others having other Persons with which the Company has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly do, or propose to do, any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):XxxxXxx.xxx:
(a) amend or otherwise change the Company's Articles of Incorporation or Bylaws;
(xb) except for the issuance of shares of Company Common Stock upon the exercise or conversion of currently outstanding Stock Purchase Rights, issue, sell, contract to issue or sell, pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge, disposition, grant or Encumbrance of (i) any shares of capital stock of any class of the Company, (ii) any assets of the Company, except in the ordinary course of business and in a manner consistent with past practice or (iii) any options, warrants, convertible securities or other rights 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;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock or make any other actualsecurities, constructive property or deemed distributions in otherwise, with respect of, to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise make any payments to its stockholders in their capacity as suchacquire, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March directly or indirectly, 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(bi) acquire (x) issueincluding, deliverwithout limitation, sellby merger, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoconsolidation, or any rights, warrants acquisition of stock or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (yassets) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess material amount of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of inventoryany Person, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months andor make any loans or advances, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of business and consistent with past practice; (iii) enter into any contract or agreement other than in the normalordinary course of business, day-to-day operations of the Companyconsistent with past practice; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require authorize any other separate or special authorization of any nature (that is, single capital expenditure which is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually 50,000 or capital expenditures which are, in the aggregate, in excess of $500,000 200,000 for the Company taken as a whole; (v) enter into any agreement in which the aggregate during obligation of the Company exceeds $50,000 or which shall not terminate or be subject to termination for convenience within 30 days following execution; (vi) license any calendar monthTechnology or IP Rights; or (vii) enter into or amend any contract, except sales of inventory agreement, commitment or obsolete assets arrangement with respect to any matter set forth in the Ordinary Course of Businessthis subsection (e);
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsenter into or amend any employment, inventory, supplies and obsolete assets, (i) amend consulting or otherwise modifyagency agreement, or terminateincrease the compensation payable or to become payable to its officers, employees, agents or consultants, or grant any material contractseverance or termination pay to, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement any director, officer or other material agreement employee of the Company Company, or establish, adopt, enter into or amend any of its Subsidiaries ifEmployee Benefit Plan, in each casecollective bargaining, such contractbonus, profit-sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance, benefit or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any director, officer or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employee;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action, other than reasonable and usual actions in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness with respect to accounting methods, policies or procedures (including for this purpose any indebtedness evidenced by notesincluding, debentureswithout limitation, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement procedures with respect to the payment of accounts payable and obligations under letters collection of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000accounts receivable);
(h) except as may be required as a result of a change in law make any Tax election or in U.S. GAAP, change settle or compromise any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its SubsidiariesTax liability;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claimsclaim, liabilities liability or obligationsobligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice;
(j) take any action that would or is reasonably likely to result in any of liabilities reflected the representations or reserved against inwarranties of the Company set forth in this Agreement being untrue in any material respect, or contemplated by, in any covenant of the Company Financial Statements (or the notes thereto) or incurred set forth in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e)this Agreement being breached, or arising from in any of the Transactions, including payments conditions to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month the Merger specified in the aggregate;Article IV not being satisfied; or
(k) (x) increase in any manner the compensation and employee benefits of agree to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Shopnow Com Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) until the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects except as contemplated by this Agreement, carry on its business in the regular and ordinary course of its business as currently conducted, maintain all assets other than those disposed of in the ordinary course of business in good repair and condition, confer on a regular basis with Parent to report material operational matters and any proposals to engage in material transactions and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and employees and preserve its present relationships with customers, suppliers and others having significant business dealings with it. Without limiting the generality of the foregoing, and during such period, except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which consent shall not be unreasonably withheldwithheld or delayed):
(a) (x) 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 otherwise make any payments to its stockholders in their capacity as such, such (other than the regular quarterly payment by a Subsidiary of a dividend of not greater than $.04 per Share payable or distribution to stockholders of record on a date no earlier than March , 2017the Company or another wholly owned Subsidiary), (y) split, combine or reclassify any of its capital stock 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 (z) purchasepurchase (other than issuances by a wholly owned Subsidiary), redeem or otherwise acquire any shares of its capital stock or those of the Company or any of its Subsidiaries Subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (xexcept as set forth in item 3.12(a) of the Company Letter, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges issuances by a wholly owned Subsidiary of the Company of its capital stock of the Subsidiaries of to the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify or alter the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)foregoing;
(c) amend its Certificate of Incorporation or By-laws or other similar organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, limited liability company, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets, other than (i) transactions which involve assets that have having a value purchase price not in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
or (ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to acquisitions or purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated assets to the person making the decision or taking the action.extent permitted by Section 6.1(m);
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease lease, license, encumber or otherwise dispose of, or agree to sell, lease lease, encumber or otherwise dispose of, any of its assets, other than transactions that are in the ordinary course of business consistent with past practice or which involve assets that have a value which in the aggregate are not in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business500,000;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend incur any indebtedness for borrowed money or otherwise modifyguarantee any such indebtedness or issue or sell, or terminatevary the terms of, any material contract, agreement debt securities or commitment, (ii) warrants or enter into rights to acquire any joint venture, lease or management agreement or other material agreement debt securities of the Company or any of its Subsidiaries ifSubsidiaries, guarantee any debt securities of others, enter into any "keep-well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, except for borrowings incurred in the ordinary course of business consistent with past practice not to exceed $100,000 in the aggregate or non-acquisition-related borrowings under existing credit facilities not to exceed $100,000 in the aggregate, or make any loans, advances or capital contributions to, or other investments in, any other person, other than to or in the Company or any wholly owned Subsidiary of the Company;
(g) alter (through merger, liquidation, reorganization, restructuring or in any other fashion) the corporate structure or ownership of the Company or any Subsidiary;
(h) except as disclosed in item 3.12(a) of the Company Letter, increase the compensation payable or to become payable to its directors, officers or employees, except for increases required under employment agreements existing on the date hereof, and increases for employees other than officers in the ordinary course of business consistent with past practice, or grant any severance or termination pay, or make any loan, to, or enter into any employment or severance agreement, or establish, adopt, enter into, or amend or take action to enhance or accelerate any rights or benefits under, any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except, in each case, for changes which are less favorable to participants in plans, agreements, trusts, funds, policies or arrangements, or as may be required by the terms of any such contractplan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement existing on the date hereof or could reasonably be expected to involve the receipt comply with applicable law or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)regulation;
(gi) (x) except as contemplated by Section 7.11 hereof knowingly violate or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur fail to perform any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases material obligation or other similar instruments, or secured duty imposed upon it by any lien on any propertyapplicable material federal, obligations under any title retention agreement and obligations under letters of credit state or similar credit transaction) in a single transaction local law, rule, regulation, guideline or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000ordinance;
(hj) settle or compromise any suit, proceeding, investigation or claim or threatened suit, proceeding, investigation or claim for an amount that is more than $100,000 in the case of any individual suit, proceeding or claim or $500,000 for all suits, proceedings or claims;
(k) except to the extent required by law or agreed to by Parent, (i) compromise any material tax liability or (ii) prepare or file any material tax return inconsistent with past practice or, on any such tax return or otherwise, take any position, make any material election, or adopt any material accounting method that is inconsistent with positions taken, elections made or methods used in the past in preparing or filing similar tax returns;
(l) except as may be required as a result of a change in law or in U.S. GAAPUnited States generally accepted accounting principles, make any material change in its method of accounting;
(m) make or agree to make any of new capital expenditure not previously finally committed to that, individually, exceeds $2,000,000; provided, however, that as to any individual capital expenditure in an amount equal to or greater than $500,000 but less than or equal to $2,000,000, the accounting principles Company will consult with Parent (it being understood that no consent is required hereunder);
(n) except to the extent permitted by Section 5.1(j), pay, discharge, settle or practices used by it materially affecting the reported consolidated assetssatisfy any claims, liabilities or results obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction, (1) in the ordinary course of operations business consistent with past practice or in accordance with their terms, of liabilities recognized or disclosed in the most recent consolidated financial statements (or the notes thereto) of the Company and its Subsidiariesincluded in the Company Filed SEC Documents or incurred since the date of such financial statements in the ordinary course of business consistent with past practice or (2) of liabilities required to be paid, discharged or satisfied pursuant to the terms of any contract in existence on the date hereof;
(io) except enter into, modify in the Ordinary Course of Business, settle or compromise any material pending respect, amend in any material respect or threatened suit, action terminate any material contract or claim, other than settlements or compromises requiring payments by agreement to which the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in is a party or waive (except to the aggregateextent permitted by Section 5.3), release or assign any material rights or claims;
(jp) paycommence any voluntary petition, discharge proceeding or satisfy action under any material claimsbankruptcy, liabilities insolvency or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatesimilar laws;
(kq) except in the ordinary course of business consistent with past practice, sell, assign, transfer, license or permit to lapse any material right with respect to the Company Intellectual Property Rights; or
(xr) increase in any manner the compensation and employee benefits of authorize, recommend, propose or announce an intention to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated)the foregoing, or pay enter into any pension contract, agreement, commitment or retirement allowance not required by law or arrangement to do any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Zilog Inc)
Conduct of Business by the Company Pending the Merger. Except as Unless Parent shall otherwise expressly contemplated by this Agreement or as set forth agree in writing, the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date business of the termination of this Agreement or (ii) Company shall be conducted in and only in, and the Effective TimeCompany shall not take any action except in, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent of business and in a manner consistent therewith, with past practice and in accordance with applicable law. The Company shall use its reasonable best efforts to preserve intact its current the business organizationorganization of the Company, to keep available the services of its the current officers and officers, employees and consultants of the Company and to preserve its the current relationships with of the Company with, and the goodwill of, customers, suppliers and others having other Persons with which the Company has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly do, or propose to do, any of its Subsidiaries not to, the following without the prior written consent of Parent (Parent, which consent shall not be unreasonably withheld)::
(a) amend or otherwise change its Articles of Incorporation (xexcept as provided in the Company's Amended Articles) or Bylaws;
(b) except for the issuance of shares of Company Common Stock upon the exercise or conversion of currently outstanding Options or Warrants issue, sell, contract to issue or sell, pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge, disposition, grant or Encumbrance of (i) any shares of capital stock of any class of the Company, (ii) any options, warrants, convertible securities or other rights 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 (iii) except in the ordinary course of business and in a manner consistent with past practice, any assets of the Company;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock or make any other actualsecurities, constructive property or deemed distributions in otherwise, with respect of, to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise make any payments to its stockholders in their capacity as suchacquire, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March directly or indirectly, 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(be) (xi) issueacquire (including, deliverwithout limitation, sellby merger, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoconsolidation, or any rights, warrants acquisition of stock or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (yassets) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or any material amount of assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise acquire as an accommodation become responsible for, the obligations of any Person, or agree to acquire make any assets that have a value loans or advances, except in the ordinary course of business and consistent with past practice; (iii) enter into any contract or agreement other than in the ordinary course of business, consistent with past practice; (iv) authorize any single capital expenditure which is in excess of $100,000 individually 30,000 or capital expenditures which are, in the aggregate, in excess of $500,000 60,000 for the Company taken as a whole; (v) enter into any agreement in which the aggregate during obligation of the Company exceeds $30,000 or which shall not terminate or be subject to termination for convenience within 30 days following execution; (vi) license any calendar month; For purposes of this Section 6.1Technology or IP Rights, an action taken will be deemed except nonexclusive licenses to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices end users of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken 's products granted in the ordinary course of the normalCompany's business, day-to-day operations of the Companyconsistent with past practice; and
or (ivvii) does not require authorization by the Company’s board of directors (enter into or committee of the board of directors) and does not require amend any other separate contract, agreement, commitment or special authorization of arrangement with respect to any nature (that is, is matter set forth in accordance with the authority delegated to the person making the decision or taking the action.
this subsection (e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business);
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsenter into or amend any employment, inventory, supplies and obsolete assets, (i) amend consulting or otherwise modifyagency agreement, or terminateincrease the compensation payable or to become payable to its officers, employees, agents or consultants, or grant any material contractseverance or termination pay to, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement any director, officer or other material agreement employee of the Company Company, or establish, adopt, enter into or amend any of its Subsidiaries ifEmployee Benefit Plan, in each casecollective bargaining, such contractbonus, profit-sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance, benefit or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any director, officer or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employee;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action, other than reasonable and usual actions in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness with respect to accounting methods, policies or procedures (including for this purpose any indebtedness evidenced by notesincluding, debentureswithout limitation, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement procedures with respect to the payment of accounts payable and obligations under letters collection of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000accounts receivable);
(h) except as may be required take any action that would prevent Parent from being able to account for the Merger as a result pooling of a change in law interests whether or in U.S. GAAP, change any not permitted by the provisions of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesthis Article VI;
(i) except in the Ordinary Course of Business, make any Tax election or settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregateTax liability;
(j) pay, discharge or satisfy any material claimsclaim, liabilities liability or obligationsobligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, business and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateconsistent with past practice;
(k) (x) increase take any action that would or is reasonably likely to result in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Code, or, if subject to Section 409A representations or warranties 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) this Agreement being untrue in any material respect, or in any covenant of the Disclosure ScheduleCompany set forth in this Agreement being breached, or in any of the conditions to the Merger specified in Article IV not being satisfied;
(l) take any action of the type covered in Section 2.7 above;
(m) incur any additional indebtedness for borrowed money; or
(n) agree to do any of the foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from the date of this Agreement prior to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, unless Parent shall otherwise consent in writing or except as expressly permitted or required pursuant to this Agreement:
(a) The businesses of the Company shalland the Company Subsidiaries shall be conducted only in the ordinary and usual course of business and consistent with past practices and in a manner not involving the entry by the Company or any Company Subsidiary into a business that is materially different from the business of the Company and the Company Subsidiaries as of the date hereof, and the Company and the Company Subsidiaries shall cause each of its Subsidiaries to, in use all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its commercially reasonable best efforts to maintain and preserve intact its current their respective business organizationorganizations and to maintain significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having business relationships with them to keep available the services of its their current key officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. employees; and
(b) Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of foregoing Section 7.5 and Article IX5.1(a), the Company shall notnot directly or indirectly, and shall cause each not permit any of its the Company Subsidiaries not to, without do any of the prior written consent of Parent (which shall not be unreasonably withheld):following:
(ai) acquire any assets, rights, securities or property (xan “Acquisition”) declarein excess of $2,000,000 in the aggregate;
(ii) sell, set aside or pay any dividends onlease, or make any other actuallicense, constructive or deemed distributions in respect ofsell and leaseback, any of its capital stockpledge, mortgage, encumber, transfer or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on dispose (a date no earlier than March , 2017, (y“Disposal”) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other assets, rights, securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock property of the Company or any Company Subsidiary (other than sales of its Subsidiaries Hydrocarbons in the ordinary course of business consistent with past practice and the sale or any other securities thereof disposition of surplus or any rights, warrants or options to acquire obsolete equipment in the ordinary course of business (any such shares sale or disposition, a “Surplus Sale”)) or terminate, cancel, materially modify or enter into any material commitment, transaction, line of business or other securities agreement (except for a “Commitment”), in excess of $2,000,000 in the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)aggregate;
(biii) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, with or by purchasing a substantial equity interest in or a substantial portion of the assets of or equity inof, or by any other manner, any business or any business, corporation, partnership, association or other business organization or division thereof thereof;
(iv) amend or propose to amend its Governing Documents or, in the case of the Company Subsidiaries, their respective Governing Documents;
(v) except for the non-cash dividends disclosed and required to be paid on the Company Preferred Stock, 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;
(vi) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares of its capital stock, other securities, other ownership interests or any options, warrants or rights to acquire any such stock, securities or interests, other than in connection with the relinquishment of shares by employees and directors of the Company in payment of withholding tax upon the vesting of restricted stock;
(vii) split, combine or reclassify any outstanding shares of its capital stock;
(viii) except for (A) the Company Common Stock issuable upon exercise of options outstanding on the date hereof (or granted after the date hereof as permitted by this Agreement) and the vesting of restricted stock awards granted prior to the execution of this Agreement, (B) the Company Common Stock issuable upon conversion of the Company Preferred Stock, and (C) the Company Common Stock issuable upon exercise of the Warrants, issue, sell, dispose of or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company Subsidiaries of, any shares of, or any options, warrants or rights of any kind to acquire any assets that have a value shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any other securities in excess of $100,000 individually respect of, in lieu of, or in excess substitution for any class of $500,000 in its capital stock outstanding on the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companydate hereof;
(iiix) with respect to sales modify the terms of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins any existing indebtedness for borrowed money or security issued by the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer ordersCompany or any Company Subsidiary;
(iiix) is taken create, assume or incur any indebtedness for borrowed money, except indebtedness incurred in the ordinary course of business, but only if the normalamount of such indebtedness, day-to-day operations when added to all other indebtedness of the Company; andCompany and the Company Subsidiaries for borrowed money then outstanding, does not exceed $300,000,000;
(ivxi) does not require authorization by assume, guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of any other Person, or agree to maintain the financial condition of any other person or make any loans or advances, except to or for the benefit of the Company Subsidiaries in the ordinary course of business consistent with past practice;
(xii) make any loans, advances or capital contributions to any other Person (other than any loans or advances between any Company Subsidiaries or between the Company and any Company Subsidiary);
(xiii) create or assume any Lien on any material asset;
(xiv) authorize, recommend or propose any change in the Company’s board capitalization or the capitalization of directors any Company Subsidiary;
(xv) (A) 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, (B) execute or otherwise enter into any employment, deferred compensation or other similar agreement (or committee any amendment to any such existing agreement) with any such director, executive officer or employee of the board Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance or termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of current or former directors, executive officers or employees of the Company or any Company Subsidiary, (E) and does adopt or establish any new employee benefit plan or amend in any material respect any existing Company Employee Benefit Plan, (F) provide any material benefit to a current or former director, executive officer or employee of the Company or any Company Subsidiary not require required by any other separate existing agreement or special authorization Company Employee Benefit Plan, (G) grant any awards under any Company benefit Plan (including the grant of stock options or restricted stock) or remove or modify any nature existing restrictions in any Company Benefit Plan on any awards made thereunder or (G) take any action that is, is would result in accordance with its incurring any obligation for any payments or benefits described in Section 3.10(f) (without regard to whether the authority delegated to the person making the decision or taking the action.
(etransactions contemplated by this Agreement are consummated) except to the extent required by contractual commitments existing on in a written contract or agreement in existence as of the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value this Agreement and as set forth in excess Section 5.1(b)(xv) of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of BusinessCompany Disclosure Letter;
(fxvi) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into or amend (other than as required by existing Company Employee Benefit Plans or employment agreements or by applicable law) in any joint venturerespect any employment, lease consulting, severance or management indemnification agreement or other material agreement of between the Company or any of its the Company Subsidiaries ifand any of their respective directors, in each caseofficers, such contractagents, agreementconsultants or employees, commitment, venture, lease or management any collective bargaining agreement involves or could reasonably be expected other obligation to involve the receipt any labor organization or payment employee incurred or entered into by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(ixvii) except make any changes in the Ordinary Course of Businessits reporting for taxes or accounting methods other than as required by GAAP or applicable law; make or rescind any Tax election or file any material amended Tax return; make any change to its method or reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any Tax liability or enter into any transaction with an Affiliate outside the ordinary course of business if such transaction would give rise to a material pending tax liability;
(xviii) settle, compromise or threatened suit, action otherwise resolve any litigation or claim, other legal proceedings (which are not reserved for or reflected on the balance sheets included in the Company Financial Statements) involving payments of more than settlements $500,000 in the aggregate in any one case by or compromises requiring payments by to the Company or any of its Subsidiaries of no the Company Subsidiaries;
(xix) pay or discharge any claims, Liens or liabilities (which are not reserved for or reflected on the balance sheets included in the Company Financial Statements) involving more than $100,000 individually and $500,000 per month 2,000,000 in the aggregate;
(jxx) pay, discharge or satisfy write off any material claims, liabilities accounts or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatereceivable;
(kxxi) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend make or commit itself to any pensionmake capital expenditures in excess of the aggregate budgeted amount set forth in the Company’s fiscal 2007 capital expenditure plan previously provided to Parent, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than except as may be required to (A) continue operations on the establishment drilling, completion or plugging of terms of employment (including compensation) of newly hired employees other than executive officers in any well or well operations for which the Ordinary Course of Business Company has consented to participate and is required to participate pursuant to applicable agreements or (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A conduct emergency operations on any well, pipeline or other facility;
(xxii) (A) modify, amend, terminate or waive any material right under any Company Contract or (B) enter into any agreement that would constitute a Company Contract if entered into as of the Codedate of this Agreement;
(xxiii) enter into, ormake or assume any Xxxxxx;
(xxiv) enter into new contracts, if subject to Section 409A or amend the terms of the Codeany existing contracts, to not result sell Hydrocarbons other than in the application ordinary course of the additional Tax thereunder business at market pricing, but in no event any having a duration longer than three months;
(providedxxv) fail to timely meet in any material way its royalty payment obligations in connection with its oil and gas leases;
(xxvi) enter into any agreement, arrangement or commitment that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that limits or otherwise restricts the Company and or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, limit or restrict Parent or any of its Subsidiaries may pay cash bonuses and other cash incentive compensation or any of their respective Affiliates or any successor thereto, from engaging or competing in respect any line of calendar year 2016 business in which it is currently engaged or in any geographic area material to the Persons business or operations of Parent or any of its Subsidiaries;
(xxvii) terminate, amend, modify or waive any provision of any confidentiality or standstill agreement to which it is a party or fail to enforce, to the fullest extent permitted by law, the provisions of such agreement, including by obtaining injunctions to prevent any breaches of such agreement and to enforce specifically the terms and provisions thereof;
(xxviii) organize or acquire any Person that could become a Subsidiary;
(xxix) enter into any commitment or agreement to license or purchase seismic data that will cost in excess of $200,000, other than pursuant to agreements or commitments existing on the amounts date hereof and set forth in Section 6.1(k5.1(xxix) of the Company Disclosure ScheduleLetter;
(xxx) grant approval for purposes of Section 203 of the DGCL of any “business combination” or any acquisition of “voting stock” of the Company, each as defined in Section 203 of the DGCL;
(xxxi) adopt a plan of complete or partial liquidation, dissolution, or reorganization;
(xxxii) except as permitted by Section 6.8, knowingly take, or agree to commit to take, any action that would or would reasonably be expected to result in the failure of a condition set forth in Article 7 or as of any time prior to, the Effective Time, or that would materially impair the ability of the Company, Parent, Merger Sub or the holders of shares of Company Common Stock to consummate the Merger in accordance with the terms hereof or materially delay such consummation;
(xxxiii) release any third party from the confidentiality and standstill provisions of any agreement to which the Company or any of the Company Subsidiaries is a party, and the Company and Company Subsidiaries shall enforce any such provisions contained in such agreements and not waive any of the provisions thereof; or
(xxxiv) take or agree in writing or otherwise to take any of the actions precluded by Sections 5.1(a) or (b).
(c) Prior to the Effective Time, the Company may take such actions as may be necessary to cause dispositions of equity securities of the Company (including derivative securities) pursuant to the transactions contemplated by this Agreement by any officer or director of the Company who is subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3 promulgated under the Exchange Act in accordance with the procedures set forth in such Rule 16b-3 and the Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP SEC No-Action Letter (January 12, 1999).
(d) Notwithstanding anything to the contrary herein, including Sections 5.1(a) and (b), neither the Company nor any Company Subsidiary shall be required to maintain any specific level of capital expenditures, regardless of any budgets or projections prepared by the Company with respect to the period in question. In connection with the continued operation of the Company and the Company Subsidiaries between the date hereof and the Closing Date, the Company will confer on a regular and frequent basis with one or more representatives of Parent designated to the Company on operational matters and the general status of ongoing operations and provide such information regarding the Company and its business as may be reasonably requested by Parent (including, without limitation, monthly production and sale information and all financial information provided to the senior management of the Company or any Company Subsidiary). The Company acknowledges that Parent does not and will not waive any rights it may have under this Agreement as a result of such consultations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement to and continuing until the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeTime (the “Pre-Closing Period”), the Company shallagrees, and shall cause each of its Subsidiaries toSubsidiary (except to the extent that Parent shall otherwise consent in writing, in all material respects which consent shall not be unreasonably withheld or delayed), to carry on its business in the regular and ordinary course and, of business consistent with past practices and to the extent use all commercially reasonable efforts consistent therewith, use its reasonable best efforts with past practices and policies to preserve intact its current present business organization, keep available the services of its current present officers and key employees and consultants and preserve its relationships with customers, suppliers suppliers, distributors, licensors, licensees, and others having business dealings with it, to the end that its goodwill and ongoing businesses would be unimpaired at the Effective Time. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly specifically contemplated by this Agreement or as specifically set forth in the Disclosure Schedules, and subject to the provisions Section 5.01 of Section 7.5 and Article IX, the Company shall notDisclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly, do any of its Subsidiaries not to, the following without the prior written consent of Parent (Parent, which consent shall not be unreasonably withheld):withheld or delayed:
(a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents;
(xb) issue, sell, pledge, dispose of, grant, encumber, authorize or propose the issuance, sale, pledge, disposition, grant or encumbrance of any shares of its capital stock of any class, or any options, warrants, convertible securities or other rights 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 any Subsidiary, except pursuant to the terms of options or warrants outstanding on the date of this Agreement;
(c) sell, lease, license, pledge, grant, encumber or otherwise dispose of any of its properties or assets which are material, individually or in the aggregate, to its business, except for (i) the sale of products in the ordinary course of business consistent with past practices, and (ii) in the ordinary course of business consistent with past practices with the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed;
(d) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock, property or make any other actualotherwise, constructive or deemed distributions in with respect of, to any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, ;
(ye) split, combine combine, subdivide, redeem or reclassify any of its capital stock 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 stock, or (z) purchase, redeem purchase or otherwise acquire any shares of capital stock of the Company acquire, directly or any of its Subsidiaries or any other securities thereof or any rightsindirectly, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stockstock except from former employees, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than directors and consultants in accordance with agreements providing for the issuance repurchase of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant any termination of service by such party and except to the terms of extent required to complete the applicable equity incentive plan or agreement governing the applicable Company Stock Option)Merger;
(cf) amend its Certificate of Incorporation or By-laws or other organizational documentsacquire (including, without limitation, by merger, consolidation, or alter through merger, liquidation, reorganization, restructuring acquisition of stock or assets) any interest in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or any division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companythereof;
(iig) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer ordersinstitute or settle any Legal Proceeding;
(iiih) is taken incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances, except for advances to employees in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariespractices;
(i) except authorize any capital expenditure in the Ordinary Course excess of Business, settle $5,000 individually or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month 25,000 in the aggregate;
(j) enter into any lease or contract for the purchase of any property, real or personal, in excess of $5,000 individually or $25,000 in the aggregate, except for purchases of inventory in the ordinary course of business consistent with past practices;
(k) waive or release any material right or claim;
(l) increase, or agree to increase, the compensation payable, or to become payable, to its officers or employees, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any of its directors, officers or other employees, 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; provided, however, that the foregoing provisions of this subsection shall not apply to any amendments to employee benefit plans described in Section 3(3) of ERISA that may be required by Law;
(m) accelerate, amend or change the period of exercisability or the vesting schedule of restricted stock or Company Options granted under any option plan, employee stock plan or other agreement or authorize cash payments in exchange for any Company Options granted under any of such plans, except as specifically required by the terms of such plans or any such agreement or any related agreement in effect as of the date of this Agreement and disclosed in the Company Disclosure Schedule;
(n) extend any offers of employment to potential employees, consultants or independent contractors or terminate any existing employment relationships;
(o) amend or terminate any Material Contract;
(p) enter into any licensing, distribution, OEM agreements, sponsorship, advertising, merchant program or other similar contracts, agreements or obligations that may not be cancelled without penalties by the Company upon notice of 30 days or less;
(q) enter into any contract or agreement material to the business, results of operations or financial condition of the Company, except for such contracts or agreements that are otherwise permitted (or specifically excepted) by this Section 5.01;
(r) pay, discharge or satisfy any material claimsclaim, liabilities liability or obligationsobligation (absolute, accrued, asserted, unasserted, contingent or otherwise);
(s) take any action with respect to accounting policies, principles or procedures;
(t) except as required under U.S. GAAP, make or change any material Tax or accounting election, change any annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any Subsidiary, surrender any right to claim refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any Subsidiary, or take any other action or omit to take any action other than in the ordinary course of business that would have the effect of increasing the Tax liability of the Company or any Subsidiary or Parent;
(u) (i) sell, assign, lease, terminate, abandon, transfer, permit to be encumbered or otherwise dispose of or grant any security interest in and to any item of the Company Intellectual Property, in whole or in part, (ii) grant any license with respect to any Company Intellectual Property, other than a license of Software granted to customers of the payment, discharge Company or satisfaction any Subsidiary to whom the Company or any Subsidiary licenses such Software in the Ordinary Course ordinary course of Business of liabilities reflected business, (iii) develop, create or reserved against ininvent any Intellectual Property jointly with any third party, (iv) disclose, or contemplated byallow to be disclosed, any confidential Company Intellectual Property, unless such Company Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against disclosure thereof or (v) disclose, permit access to, license or otherwise convey all or any part of the Company Financial Statements Source Materials to any third party;
(v) make (or become obligated to make) any bonus payments to any of its officers or employees;
(w) revalue any of its assets, including writing down the value of inventory or writing off notes theretoor accounts receivable;
(x) fail to maintain its equipment and other assets in good working condition and repair according to the standards it has maintained up to the date of this Agreement, subject only to ordinary wear and tear;
(y) knowingly take any action or incurred in the Ordinary Course of Business fail to take any action that would cause there to be a Company Material Adverse Effect;
(z) permit any insurance policy naming it as a beneficiary or relating a loss payable payee to matters expressly permitted by clauses be cancelled or terminated without notice to Parent;
(daa) or (e)write off as uncollectible, or arising from the Transactionsestablish any extraordinary reserve with respect to, including payments any account receivable or other indebtedness in excess of $25,000 with respect to advisorsa single matter, and except for payments, discharges and satisfaction or in excess of no more than $100,000 individually and $500,000 per month 50,000 in the aggregate;; or
(kbb) (x) increase take, or agree in any manner the compensation and employee benefits of writing or otherwise to take, any of its directors, executive officers and other key employees, hire any new employees the actions described in subsections (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, a) through (yaa) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;above.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated permitted by clauses (a)(i) through (xxiii) of this Agreement or as set forth in the Disclosure ScheduleSection 4.1, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course of its business as currently conducted and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with itit to the end that its goodwill and ongoing business shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject Company Letter (with specific reference to the provisions of Section 7.5 and Article IXapplicable subsection below), prior to the Effective Time:
(a) The Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent Buyer (which consent, in the case of clauses (v), (vi), (viii), (ix), (xii), (xiv), (xv), (xvi), (xix), and (xxi) shall not be unreasonably withheld):
(ai) (xA) 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 otherwise make any payments to its stockholders shareholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yB) split, combine or reclassify any of its capital stock 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 (zC) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (xii) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Company Stock Option Plan) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for the issuance of shares of Company Common Stock upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to Company Warrant outstanding on the terms date of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)this Agreement in accordance with their current terms;
(ciii) amend its Certificate their certificate of Incorporation or By-laws incorporation, bylaws or other organizational documentsdocuments or agreements, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the their corporate structure or ownership of any Subsidiary of the Companystructure;
(div) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyassets;
(iiv) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have assets, other than in the ordinary course of business consistent with past practice;
(vi) incur any indebtedness for borrowed money other than pursuant to the Company Credit Facility, guarantee any such indebtedness or make any loans, advances or capital contributions to, or other investments in, any other Person (other than (A) among the Company and its Subsidiaries or (B) the issuance of PIK Notes to JWC pursuant to the Senior Subordinated Loan Agreement);
(vii) adopt a value plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the Merger) or otherwise permit its corporate existence, or any of the rights or franchises or any material license, permit or authorization under which the business operates to be suspended, lapsed or revoked;
(viii) enter into or adopt any, or amend any existing, severance plan, agreement or arrangement or enter into or amend any Company Plan, employment, or any consulting agreement;
(ix) hire additional employees, officers, consultants or other independent contractors receiving compensation in excess of $100,000 individually per year, increase the compensation payable or to become payable to its directors, officers or employees (except for increases in excess of $500,000 compensation in the aggregate during any calendar month, except sales ordinary course of inventory business consistent with past practice in salaries or obsolete assets in wages of employees of the Ordinary Course Company or its Subsidiaries who are not officers of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend the Company or otherwise modifyits Subsidiaries), or terminategrant any severance or termination pay to, any material contract, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease any director or management agreement or other material agreement officer of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instrumentsSubsidiaries, or secured by any lien on any propertyestablish, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangementsadopt, in the aggregateenter into, having a value in excess of $100,000;
(h) or, except as may be required as to comply with Applicable Law, amend in any material respect or take action to enhance in any material respect or accelerate any rights or benefits under, any labor, 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;
(x) knowingly violate or knowingly fail to perform any obligation or duty imposed upon it by any Applicable Law;
(xi) make any change to accounting policies or procedures (other than actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any Tax Return inconsistent with its past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods;
(xiii) fail to file in a result of a change in law timely manner any Tax Returns that become due or in U.S. GAAP, fail to pay any Taxes that become due;
(xiv) make or rescind any express or deemed election relating to Taxes or change any of the accounting principles its methods of reporting income or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesdeductions for Tax purposes;
(ixv) except in the Ordinary Course of Business, commence any litigation or proceeding with respect to any material Tax liability or refund or settle or compromise any material pending Tax liability or threatened suit, action commence any other litigation or claim, proceedings or settle or compromise any other than settlements material claims or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregatelitigation;
(jxvi) except as set forth in Section 4.1(a)(xvi) of the Company Letter and except for sales and purchases in the ordinary course of business and the hiring of employees, officers or consultants in the ordinary course of business as permitted in subsection (ix), enter into, renew, terminate or amend any Material Contract; or purchase or lease any real property;
(xvii) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any Indebtedness or the payment, discharge or satisfaction, in the Ordinary Course ordinary course of Business business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements most recent financial statements (or the notes thereto) of the Company included in the Financial Statements or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practice;
(kxviii) create or form any Subsidiary or make any other investment in another Person;
(xxix) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts except as set forth in Section 6.1(k4.1(a)(xix) of the Disclosure ScheduleCompany Letter and make or authorize any new capital expenditure or expenditures that individually is in excess of $50,000 or in the aggregate are in excess of $250,000;
(xx) sell or license to any third party any of its Intellectual Property other than non-exclusive licenses in the ordinary course of business;
(xxi) allow any insurance policy relating to the Company's or any of its Subsidiaries' business to be amended or terminated without replacing such policy with a policy providing at least equal coverage, insuring comparable risks and issued by an insurance company financially comparable to the prior insurance company;
(xxii) enter into any contract, agreement, commitment or arrangement with any Affiliated Person (other than the issuance of PIK Notes to JWC pursuant to the Senior Subordinated Loan Agreement); or
(xxiii) authorize, recommend, propose or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(b) The Company shall, and shall cause its Subsidiaries to:
(i) maintain its material assets and properties in the ordinary course of business in the manner historically maintained, reasonable wear and tear, damage by fire and other casualty excepted;
(ii) promptly repair, restore or replace all assets and properties in the ordinary course of business consistent with past practice;
(iii) upon any damage, destruction or loss to any of its material assets or properties, apply any and all insurance proceeds, if any, received with respect thereto to the prompt repair, replacement and restoration thereof;
(iv) comply in all material respects with all Applicable Laws;
(v) take all actions necessary to be in compliance with all Material Contracts and to maintain the effectiveness of all Company Permits;
(vi) notify Buyer in writing of the commencement of any material action, suit, claim, investigation or other like proceeding by or against the Company or any of its Subsidiaries; and
(vii) pay accounts payable and pursue collection of its accounts receivable in the ordinary course of business, consistent with past practices.
Appears in 1 contract
Samples: Merger Agreement (CSK Auto Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement to until the Closing or earlier to occur termination of this Agreement, except as (i) the date of the termination of otherwise expressly contemplated or permitted by this Agreement or Agreement, (ii) the Effective Time, as set forth in Section 6.01 of the Company shallDisclosure Letter, (iii) as required by applicable Law or Order or (iv) with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (x) the Company shall and shall cause each of its Subsidiaries to, to conduct their respective businesses and operations in the ordinary course of business in all material respects carry on its business consistent with past practices (except for any action in the regular and ordinary course andresponse or related to any Contagion Event or any change in Law, policy or guidance of any Governmental Authority as a result of or related to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoingany Contagion Event), and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (y) the Company shall not, not and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) (x) declare, set aside amend or pay modify any dividends on, of the Constituent Documents of the Company or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, Subsidiaries;
(yb) split, combine or reclassify any of its capital stock Securities or issue or authorize the issuance of any other securities Securities in respect of, in lieu of of, or in substitution for shares for, its Securities;
(c) issue, grant, deliver or sell any Securities (other than in accordance with the terms of its capital stock awards that are issued and outstanding on the date hereof and that were issued under the Benefit Plans);
(d) merge or consolidate with any Person (z) purchase, redeem or otherwise acquire any shares of capital stock of other than the Company or any of its Subsidiaries Subsidiaries) or any other securities thereof acquire, directly or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stockindirectly, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent assets exceeding in aggregate $50,000,000 (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required reinsurance agreements) or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms Securities of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options other Person (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except ’s Subsidiaries), other than acquisitions of Investment Assets consistent with the investment policies and guidelines applicable to the Insurance Subsidiaries’ investment activities in effect as required by contractual commitments existing on of the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the CompanyAgreement;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereofmake any loans, sell, lease advances or otherwise dispose ofcapital contributions to, or agree to sell, lease or otherwise dispose ofinvestments in, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
other Person other than (f1) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law to or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries, (2) policy loans under Insurance Contracts in the ordinary course of business consistent with past practices, (3) pursuant to any Contract or other legal obligation existing at the date of this Agreement, in each case, as set forth on Section 6.01(e) of the Company Disclosure Letter or (4) in respect of acquisitions of Investment Assets consistent with the investment policies and guidelines applicable to the Insurance Subsidiaries’ investment activities in effect as of the date of this Agreement;
(f) create, incur, guarantee or assume any Indebtedness, issuances of debt securities, guarantees, loans or advances not in existence as of the date of this Agreement, except (i) Indebtedness incurred in the ordinary course of business consistent with past practices not to exceed $100,000,000 in the aggregate, (ii) Indebtedness incurred under facilities or lines of credit in existence on the date of this Agreement, (iii) Indebtedness in replacement of existing Indebtedness on customary commercial terms, consistent in all material respects with the Indebtedness being replaced, and (iv) guarantees by the Company of Indebtedness of its Subsidiaries or guarantees by the Subsidiaries of no more the Company of Indebtedness of the Company;
(g) other than in connection with Investment Assets, make or commit to make any capital expenditure, except for (i) aggregate expenditures (calculated net of proceeds from normal course asset disposals) in an amount not in excess of (and for projects consistent with) the capital expenditure budget made available to Parent prior to the date of this Agreement (the amount of the capital expenditure budget being set forth in Section 6.01(g) of the Company Disclosure Letter) and (ii) additional expenditures in an amount not to exceed $100,000 individually and $500,000 per month 10,000,000 in the aggregate;
(h) make any material change in the actuarial, underwriting, claims administration, reinsurance, reserving, payment or investment policies, practices or principles of any Insurance Subsidiary;
(i) abandon, modify, waive or terminate any material Permit;
(j) pay, discharge or satisfy any material claims, liabilities or obligationsmaterially amend or, other than the paymentpursuant to its current terms, discharge terminate, renew or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements extend any Material Contract (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (eother than any reinsurance contract), or arising from enter into any Contract (other than any reinsurance contract) that would be a Material Contract if in effect on the Transactionsdate of this Agreement, including payments to advisors, and except for payments, discharges and satisfaction of no more in each case other than $100,000 individually and $500,000 per month in the aggregateordinary course of business consistent with past practice (other than Material Contracts described in Section 4.15(a)(iii)); provided that (x) for any reinsurance transaction (or series of related reinsurance transactions), the total amount of capital commitment by the Company do not exceed $200,000,000 and (y) the renewal or extension of any Contract with a Third Party administrator do not include material changes to the terms thereof (other than changes to dates, time periods and related matters necessary to document such extension or renewal);
(k) (x) increase in enter into any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employeereinsurance agreement, other than (A) a reinsurance agreement involving capital commitments by the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business Company and (B) amendments to employment agreements required to cause such agreements to its Subsidiaries that do 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)exceed $200,000,000; provided, however, that the Company and its Subsidiaries may enter into reinsurance agreements with capital commitments in excess of $200,000,000 with the prior consent of Parent (such consent not to be unreasonably withheld, delayed or conditioned);
(l) except as required by a Benefit Plan as of the date hereof or in the ordinary course of business consistent with past practices with respect to employees who are not members of the Management Committee of the Company as of the date of this Agreement (each, a “Non-Management Employee”), grant any increases in the cash compensation of or benefits to any of its directors, officers, individual independent contractors or employees;
(m) except as required by a Benefit Plan as of the date hereof or as required by applicable Law, (i) make any grant, or increase, any severance, change in control, retention, termination or similar compensation or benefits payable to any director, employee, individual independent contractor or officer, (ii) 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 compensation or benefits under any Benefit Plan, (iii) adopt, enter into, amend or terminate any Benefit Plan (or any plan, program, agreement, or arrangement that would constitute a Benefit Plan if in effect on the date hereof), or (iv) hire or terminate (other than for cause or due to permanent disability) any employee other than Non-Management Employees;
(n) enter into or otherwise become bound by a collective bargaining agreement or similar labor Contract with a labor union, works council, employee committee or representative or other labor organization with respect to employees of the Company or any of its Subsidiaries;
(o) settle or compromise any Litigation involving claims for monetary damages (excluding settlements and compromises relating to Taxes), other than (i) settlements or compromises of claims under Insurance Contracts within applicable policy limits, (ii) settlements or compromises that require only payments of money by the Company or its Subsidiaries without ongoing limits on the conduct or operation of the Company or its Subsidiaries, which payments of money will not exceed $5,000,000 per Litigation or $15,000,000 in the aggregate for all such Litigations, in each case, in excess of the litigation reserve set forth in the Financial Statements, (iii) settlement or compromises of claims which amounts are within the litigation reserve set forth in the Financial Statements or (iv) compromises with policyholders or annuity holders involving de minimis cost or expense to the Company or its Subsidiaries, or enter into any consent, decree, injunction or similar restraint or form of equitable relief that, individually or in the aggregate, is material to the Company and its Subsidiaries, taken as a whole, or would reasonably be expected to impede or delay in any material respect the consummation of the transactions contemplated by this Agreement;
(p) adopt or implement a plan of complete or partial liquidation or resolution providing for or authorizing such liquidation or a dissolution, merger, restructuring, consolidation, recapitalization or other reorganization of the Company or any of its Subsidiaries may pay cash bonuses and Subsidiary; provided, that any Tax election otherwise permitted by Section 6.01(q) will not be prohibited by this Section 6.01(p);
(q) (i) make, revoke or amend any material election relating to Taxes, file any material amended Tax Return or surrender any right to claim a material Tax refund, offset or other cash incentive compensation reduction in respect Tax liability, (ii) settle or compromise any Litigation or other Tax proceeding relating to material Taxes or extend or waive the application of calendar year 2016 any statute of limitations regarding the assessment or collection of any Tax, (iii) make a request for a written ruling of a Taxing Authority relating to the Persons and in the amounts set forth in material Taxes, other than any ordinary course request for a determination concerning qualified status of any Benefit Plan intended to be qualified under Section 6.1(k401(a) of the Disclosure ScheduleCode or (iv) change any method of Tax accounting or change the basis for determining any item referred to in Section 807(c) of the Code;
(r) change in any material respect any method of accounting or accounting principles or practices (or any system of internal accounting controls) by the Company or any of its Subsidiaries, except for any such change required by a change in GAAP or Applicable SAP or by a Governmental Authority or applicable Law;
(s) (i) enter into any new line of business, or (ii) change in any material respect any material enterprise risk management policies, in each case, except as required by Law or by policies imposed, or requests made, by a Governmental Authority;
(t) enter into any agreement or commitment with any insurance regulatory authority other than in the ordinary course of business consistent with past practice;
(u) sell, assign, transfer, license, dispose of or encumber any assets, rights or properties (including Intellectual Property) with a fair market value in excess of $10,000,000 individually or $20,000,000 in the aggregate, including pursuant to reinsurance, except in connection with or the disposition of obsolete or worn out assets in the ordinary course of business consistent with past practice, or disposition of Investment Assets consistent with the investment policies, practices and guidelines applicable to the Insurance Subsidiaries’ investment activities in effect as of the date of this Agreement;
(v) make any material change in its reserves, or conduct any material revaluation of any assets or liabilities other than, in each case, as required by GAAP or Applicable SAP;
(w) fail to manage its Investment Assets in a manner consistent with past practices; or
(x) agree or commit to do any of the foregoing.
Appears in 1 contract
Samples: Merger Agreement (KKR & Co. Inc.)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of (i) the date of the termination of Effective Time and the date, if any, on which this Agreement is terminated pursuant to Section 8.1, except (1) as may be required by Law, (2) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned, except with respect to Section 6.1(c) and Section 6.1(d)), (3) as may be expressly contemplated or permitted pursuant to this Agreement or (ii4) as set forth in Section 6.1 of the Effective TimeCompany Disclosure Letter, (x) the Company shall, and shall cause each of its Subsidiaries to, (A) conduct its business in the ordinary course of business and in a manner consistent with past practice in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, (B) use its commercially reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees organization and preserve its present relationships and goodwill with Governmental Authorities, customers, suppliers suppliers, distributors, creditors, lessors, employees and others having other Persons with which it has material business dealings with it. Without limiting the generality of the foregoing, relations; and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (y) the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) amend or otherwise change, in any respect, the Amended and Restated Certificate of Incorporation (xas amended) declare, set aside or pay any dividends on, the Amended and Restated Bylaws of the Company (or make any other actual, constructive such equivalent organizational or deemed distributions in respect of, governing documents of any of its capital stockmaterial Subsidiaries);
(b) adjust, split, subdivide, combine, reclassify, redeem, repurchase or otherwise make acquire or amend, directly or indirectly, the terms of any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or issue other equity interests or authorize the issuance of rights, including securities convertible or exchangeable into or exercisable for any other securities in respect of, in lieu of or in substitution for shares of its capital stock (other than in connection with forfeitures of Company Equity Awards in the ordinary course);
(c) issue, sell, pledge, dispose, encumber or (z) purchasegrant any shares of its or its Subsidiaries’ capital stock, redeem or otherwise any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its Subsidiaries’ capital stock; provided, however that (i) the Company may issue shares upon the exercise of any Company Option or payment of any other Company Equity Award outstanding as of the date hereof, (ii) the Company may issue shares upon the completion of the offering period in effect under the Company ESPP on the date hereof and (iii) the Company may issue shares in respect of conversions occurring pursuant to the terms of the Convertible Notes Indenture;
(d) declare, set aside, establish a record date for, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than dividends paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Company;
(e) except as required pursuant to existing written agreements or Company Benefit Plans in effect as of the date hereof, or as otherwise required by Law, (i) increase the compensation or other benefits payable or to become payable to directors, employees or individual independent contractors of the Company or any of its Subsidiaries, other than (1) increases in base salary in the ordinary course of business consistent with past practice for any non-executive officer employees and (2) increases in cash compensation and/or rate adjustments for individual independent contractors in the ordinary course of business consistent with past practice, (ii) grant any severance or termination pay to, or enter into any severance agreement with, any current or former director, employee or individual independent contractor of the Company or any of its Subsidiaries, other than in the ordinary course of business consistent with past practice for non-executive officer employees and individual independent contractors in an amount not to exceed $100,000 per employee or contractor and not to exceed $1,000,000 in the aggregate or (iii) establish, adopt, enter into or materially amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, employees or individual independent contractors or any of their beneficiaries;
(f) grant, confer or award options, convertible securities, restricted stock, restricted stock units or other rights to acquire any of its or its Subsidiaries’ capital stock or other equity interests;
(g) (i) merge or consolidate with any other Person (excluding those only involving Subsidiaries of the Company), (ii) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any properties or assets in any transaction or series of related transactions, other than purchases of inventory and other properties or assets in the ordinary course of business or (iii) sell or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any properties or assets, other than sales or dispositions of inventory and other assets in the ordinary course of business;
(i) incur any indebtedness for borrowed money (excluding capital leases) or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or any other securities thereof (ii) assume, guarantee or any rights, warrants or options to acquire any such shares or other securities (except otherwise become liable for the withholding indebtedness for borrowed money of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent Person (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtednessa Company Subsidiary), (y) except as contemplated by this Agreementexcept, amendin each case, waive or otherwise modify the terms for indebtedness incurred under letters of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; andbusiness;
(ivi) make any capital contributions to or investments in any other Person (other than a Subsidiary);
(j) create or incur any Lien on any material asset other than (i) any immaterial Lien incurred in the ordinary course of business consistent with past practice or (ii) Permitted Liens;
(k) adopt or enter into a plan of complete or partial liquidation, dissolution, recapitalization or other reorganization (other than the Merger);
(l) settle or compromise any litigation other than settlements or compromises of litigation where the amount paid in settlement or compromise, in each case, does not require authorization by exceed $2,000,000 in the Company’s board of directors aggregate;
(or committee of the board of directorsm) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated except as required pursuant to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose terms of, or agree to sell, lease or otherwise dispose ofcomply with, any of its assets that have a value Lease, incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith, other than any capital expenditures for 2014 and 2015 not in excess of $100,000 individually or in excess the amounts set forth on Section 6.1(m) of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of BusinessCompany Disclosure Letter;
(fn) maintain insurance at materially less than current levels or otherwise in a manner inconsistent with past practice in any material respect;
(o) other than in the ordinary course of business, enter into, materially amend, renew (other than on substantially similar terms or pursuant to an automatic renewal), fail to renew (if a renewal option is granted to the Company or one of its Subsidiaries), cancel or terminate any Company Material Contract; provided, that, prior to taking any of the aforementioned actions in the ordinary course of business, the Company shall first notify Siris of its intent to take such action and reasonably consult with Siris with respect thereto;
(p) implement, adopt or make any material change to its methods, policies or practices of accounting in effect at June 30, 2014, except (i) as permitted required by clauses GAAP (dor any interpretation thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization), or (ii) and as required by a change in applicable Law;
(eq) above make, change or revoke any material Tax election, change or adopt any material method of Tax accounting, enter into any closing agreement with respect to raw materialsmaterial Taxes, inventory, supplies and obsolete assets, (i) amend settle or otherwise modify, or terminate, compromise any material contractTax liability, agreement change an annual accounting period, file any material amended Tax Return, surrender any right to claim a refund of material Taxes or commitmentconsent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment;
(r) effectuate or permit a “plant closing” or “mass layoff,” as those terms are defined in the WARN Act, (ii) affecting in whole or enter into in part any joint venturesite of employment, lease facility, operating unit or management agreement or other material agreement employee of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(is) except in the Ordinary Course enter into any new line of Business, settle or compromise business outside of its existing business segments; or
(t) enter into any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or agreement to do any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise (x) required by applicable law or by a Governmental Entity of competent jurisdiction, (y) expressly contemplated by this Agreement (including as permitted or as required by Section 7.10) or (z) set forth in Section 6.1 of the Disclosure ScheduleCompany Letter, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) until the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects to carry on its business in the regular and ordinary course and, as currently conducted and to the extent consistent therewith, use its their commercially reasonable best efforts to preserve intact its current business organization, keep available retain the services of its current key officers and employees and preserve its to maintain relationships that are at least as favorable as those currently existing with suppliers, customers, suppliers franchisees, employees and others having business dealings material relationships with itthe Company and its Subsidiaries. Without limiting the generality of the foregoing, and during such period, except as otherwise (x) required by applicable law or by a Governmental Entity of competent jurisdiction, (y) expressly contemplated by this Agreement (including as permitted or as required by Section 7.10) or (z) set forth in Section 6.1 of the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXCompany Letter, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which consent shall not be unreasonably withheldwithheld or delayed):
(a) (xi) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stockstock or partnership, limited liability or other equity interests (any such stock or interest, an “Equity Interest”), except for (A) dividends by a wholly owned Subsidiary of the Company to its parent, (B) distributions required to be made under the partnership agreement of Terminix International and (C) regular, quarterly cash dividends of the Company in an amount not more than $0.12 per Share, or otherwise make any payments to its stockholders in their capacity as such, (ii) other than in the regular quarterly dividend case of not greater than $.04 per Share payable to stockholders any wholly owned Subsidiary of record on a date no earlier than March the Company, 2017adjust, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)Equity Interests;
(b) (x) issue, deliver, sell, pledge, dispose of pledge or otherwise encumber any shares of its capital stockEquity Interest, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such sharesEquity Interests, voting securities or convertible securities securities, or equity equivalent make any changes (by combination, merger, consolidation, reorganization, liquidation or otherwise) in the capital structure of the Company or any of its Subsidiaries, other than for (i) the issuance of shares upon the exercise of Options and for pledges Company Common Stock pursuant to Company Awards outstanding as of the stock date of this Agreement, (ii) the issuance by any direct or indirect wholly owned Subsidiary of the Subsidiaries Company of its capital stock to the Company or another wholly owned Subsidiary of the Company, including foreign Subsidiaries, which are required or may be required under and (iii) the existing terms issuance of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms shares of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Common Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock OptionPurchase Plans (it being the Company’s expectation that for the March and April purchase periods not more than $1,800,000 (including not more than $300,000 representing the Company’s contribution)) will be applied to the purchase of Company Common Stock thereunder);
(c) amend or waive any provision of its Certificate of Incorporation or By-laws or other similar organizational documentsdocuments or, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary case of the Company, enter into any agreement with any stockholder in such Person’s capacity as stockholder;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
than (i) is substantially consistent in nature, scope, capital expenditures permitted by Section 6.1(e) and magnitude with the past practices of the Company;
(ii) with respect to sales purchases of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken supplies in the ordinary course of business, and (ii) consolidation program acquisitions with purchase prices up to $67 million in the normalaggregate, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (acquire any assets or committee of the board of directors) and does not require properties, including any other separate or special authorization Equity Interests of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.Person;
(e) except make or agree to make any new capital expenditure, other than capital expenditures (i) approved by the Board of Directors of the Company prior to the date hereof or within the Company’s capital budget for fiscal 2007 and previously made available to Parent or (ii) to the extent required by contractual commitments existing on not covered in clause (i), in an aggregate amount not to exceed $10,000,000;
(f) other than transactions that are in the date hereofordinary course of business, sell, lease lease, license, encumber by Lien or otherwise, or otherwise dispose of, or agree to sell, lease lease, license, encumber or otherwise dispose of, any of its assets that have having a fair market value in excess of $100,000 individually 10,000,000 in the aggregate;
(g) incur any indebtedness for borrowed money, other than (i) indebtedness for borrowed money existing solely between the Company and its wholly owned Subsidiaries (which term, for purposes of this Section 6.1(g)(i), shall include Terminix International) or between such wholly owned Subsidiaries, (ii) indebtedness for borrowed money incurred in the ordinary course of business under the Company Credit Agreement or the Company Lines of Credit in an amount at any time outstanding not to exceed the sum of $110,000,000 (being the approximate principal amount outstanding thereunder as of March 16, 2007) plus $75,000,000 through July 31, 2007 or plus $100,000,000 from August 1, 2007 thereafter, (iii) indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice in connection with transactions described in Section 6.1(d)(ii) or (iv) capital leases entered into in the ordinary course of business consistent with past practice with aggregate obligations not in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business10,000,000;
(fh) other than in the ordinary course of business consistent with past practice, modify or amend in any material respect or terminate any Company Material Contract or enter into, modify or amend any new agreement that would have been considered a Company Material Contract had it been entered into at or prior to the date hereof;
(i) settle or compromise any material action, claim, demand, suit, investigation, arbitration, litigation or similar judicial or regulatory matter;
(i) increase the salary, wages or benefits payable or to become payable to its directors, officers or employees, or any benefits provided under the Company Stock Purchase Plans, except for (A) increases required under employment agreements existing on the date hereof and (B) increases for officers and employees in the ordinary course of business; or (ii) enter into any employment, retention or severance agreement with, or establish, adopt, enter into or amend any bonus, profit sharing, thrift, stock option, restricted stock, pension, retirement, deferred compensation, retention, employment, termination or severance plan, agreement, policy or arrangement for the benefit of, any director, officer or employee, except, in each case, as may be required by the terms of any such plan, agreement, policy or arrangement or to comply with applicable law;
(i) except as permitted may be required by clauses (d) and (e) above with respect to raw materialsGAAP or as a result of a change in law, inventory, supplies and obsolete assets, (i) amend or otherwise modifymake any change in its method of accounting, or terminate, any material contract, agreement or commitment, (ii) or enter into conduct any joint venture, lease or management agreement or other material agreement of Tax affairs relating to the Company or any of its Subsidiaries ifother than in the ordinary course of business, in each case, compliance with applicable law and in substantially the same manner as heretofore conducted and in good faith in substantially the same manner as such contract, agreement, commitment, venture, lease affairs would have been conducted if this Agreement had not been entered into or management agreement involves (iii) make or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Businessmaterial Tax election, settle or compromise any material pending liability for Taxes, obtain any Tax ruling or threatened suitamend any Tax Return; or
(l) enter into any contract or agreement to, action or claimresolve to, other than settlements or compromises requiring payments by the Company or do any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Servicemaster Co)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from the date of this Agreement Prior to the earlier to occur of Effective Date, unless Acquisition shall otherwise agree in writing:
(ia) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the usual, regular and ordinary course andin substantially the same manner as heretofore conducted, to the extent consistent therewith, and shall use its reasonable best diligent efforts to preserve intact its current present business organizationorganizations, keep available the services of its current present officers and employees and preserve its their relationships with customers, suppliers and others having business dealings with itthem to the end that their goodwill and ongoing businesses shall be unimpaired at the Effective Date. Without limiting The Company shall (A) maintain insurance coverages and its books, accounts and records in the generality usual manner consistent with prior practices; (B) comply in all material respects with all laws, ordinances and regulations of Governmental Entities applicable to the foregoingCompany; (C) maintain and keep its properties and equipment in good repair, working order and condition, ordinary wear and tear excepted; and (D) perform in all material respects its obligations under all contracts and commitments to which it is a party or by which it is bound, in each case other than where the failure to so maintain, comply or perform, either individually or in the aggregate, would not result in a Material Adverse Effect;
(b) except as otherwise expressly contemplated required by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXMerger Agreement, the Company shall not, not and shall cause each of not propose to (A) sell or pledge or agree to sell or pledge any membership interest; (B) amend its Subsidiaries not to, without the prior written consent of Parent limited liability company agreement or by-laws; (which shall not be unreasonably withheld):
(a) (x) 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 otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yC) split, combine or reclassify any of its capital stock outstanding membership interests or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock membership interests of the Company, or declare, set aside or pay any dividend or other distribution payable in cash, securities or other property; or (zD) purchasedirectly or indirectly redeem, redeem purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)Shares;
(bc) the Company shall not (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (yA) except as contemplated by this Merger Agreement, amendissue, waive deliver or otherwise modify the terms sell or agree to issue, deliver or sell any additional shares of, or rights of any such rightskind to acquire any shares of, warrants its membership interest of any class, any Indebtedness or any options, rights or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant warrants to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documentsacquire, or alter through mergersecurities convertible into membership interests; (B) acquire, liquidationlease or dispose of, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materialslease or dispose of, supplies, and inventory any capital assets or any other assets other than in the Ordinary Course ordinary course of Business, business; (C) incur additional Indebtedness or encumber or grant a security interest in any asset or enter into any other material transaction other than in each case in the ordinary course of business (other than as set forth in Schedule 6.1); (D) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity interest in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value thereof, in excess of $100,000 each case in this clause (D) which are material, individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1aggregate, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
or (ivE) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease commitment or management agreement involves or could reasonably be expected arrangement with respect to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)foregoing;
(gd) (x) the Company shall not, except as contemplated by Section 7.11 hereof required to comply with applicable law, (A) adopt, enter into, terminate or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceamend any bonus, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notesprofit sharing, debenturescompensation, bondsseverance, capitalized leases termination, stock option, pension, retirement, deferred compensation, employment or other similar instrumentsCompany Plan, agreement, trust, fund or secured by other arrangement for the benefit or welfare of any lien on any propertycurrent or former officer, obligations under any title retention agreement and obligations under letters of credit employee or similar credit transactionindependent contractor; (B) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month as set forth in the aggregate;
(j) paySchedule 6.1, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits or fringe benefit of any of its directorsofficer, executive officers and other key employees, hire any new employees employee or independent contractor; (C) other than to replace an employee whose employment has terminated)as set forth in Schedule 6.1, pay any benefit not provided under any existing plan or arrangement; (D) other than as set forth in Schedule 6.1, grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Company Plan (including, without limitation, the grant of equity based or related awards, performance units or restricted equity, or pay the removal of existing restrictions or the acceleration of exercisability in any pension Company Plan or retirement allowance agreements or awards made thereunder); (E) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or Company Plan; or (F) adopt, enter into, amend or terminate any contract, agreement, commitment or arrangement to do any of the foregoing;
(e) the Company shall not make any investments in non-investment grade securities; and
(f) the Company shall not, except as required by law or any existing plan or agreement to any such employeesGAAP, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect significant accounting policies or make or rescind any express or deemed election relating to taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to taxes, or change any of calendar year 2016 to the Persons and its methods of reporting income or deductions for federal income tax purposes from those employed in the amounts set forth in Section 6.1(k) preparation of the Disclosure Schedule;federal income tax returns for the last taxable year.
Appears in 1 contract
Samples: Merger Agreement (Triad Park LLC)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and in a manner substantially consistent with past practice;
(xb) not (i) amend or propose to amend their respective articles of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock, or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or borrowings under the existing credit facilities of the Company or of any of its subsidiaries up to the existing borrowing limit on the date hereof, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed $29.0 million, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Plans, (iii) make any acquisition of any assets or any businesses other than expenditures for current assets for fixed or capital assets in each case in the ordinary course of its Subsidiaries or any other securities thereof or any rightsbusiness, warrants or options to (iv) without Parent's consent, acquire any such shares or other securities gaming property, (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance (A) sales of shares upon the exercise of Options and for pledges businesses or assets disclosed in Section 5.01 of the stock Company Disclosure Schedule, (B) pledges or encumbrances pursuant to existing credit facilities or other permitted borrowings, (C) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the buyer of such real estate, assets or facilities) to non-affiliates of the Subsidiaries Company of less than $10,000 in each such case and $100,000 in the Companyaggregate, including foreign Subsidiaries, which are required (D) sales or dispositions of businesses or assets as may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplieslaw, and inventory in the Ordinary Course (E) sales or dispositions of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness, day-to-day operations or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the extent required services of their respective present officers and key employees, and use all reasonable efforts to preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any terms of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Agreement;
(f) not enter into, amend, modify or renew any employment, consulting, severance or similar agreement with, or grant any salary, wage or other increase in compensation or increase in any employee benefit to, any director or officer of the Company or of any of its subsidiaries, except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitmentfor changes that are required by applicable law, (ii) or enter into any joint venture, lease or management agreement or other material agreement to satisfy obligations existing as of the Company date hereof, or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month (iii) in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business)business consistent with past practice;
(g) (x) except not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as contemplated may be required by Section 7.11 hereof applicable law or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceterms of contractual obligations existing as of the date hereof, incur including any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000collective bargaining agreement;
(h) not make expenditures in excess of expenditures permitted by the Company's last budget approved by the Board of Directors, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to make expenditures, except (i) expenditures which the Company or its subsidiaries are currently contractually committed to make, (ii) other expenditures not exceeding $100,000 in each such case and $300,000 in the aggregate, (iii) for emergency repairs and other expenditures necessary in light of circumstances not anticipated as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles date of this Agreement which are necessary to avoid significant disruption to the Company's business or practices used by it materially affecting operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), or (iv) for repairs and maintenance in the reported consolidated assets, liabilities or results ordinary course of operations of the Company and its Subsidiariesbusiness consistent with past practice;
(i) except in the Ordinary Course of Businessnot make, settle change or compromise revoke any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not Tax election unless required by law or make any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance settlement with any taxing authority regarding any material amount of Taxes or change in control agreement with which would reasonably be expected to materially increase the obligations of the Company or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers Surviving Corporation to pay Taxes in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;future.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in Section 6.1 of the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement pursuant to Article IX or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent and consistent therewith, with past practice and use its commercially reasonable best efforts to preserve its assets, preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers suppliers, licensees, distributors and others having business dealings with it, and maintain their material Company IP Rights. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Section 6.1 of the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXSchedule, the Company shall notnot (whether directly or indirectly, and shall cause each of its Subsidiaries not toby merger, consolidation or otherwise), without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) (x) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, stock or property) in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or other equity or voting 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 (z) purchase, redeem or otherwise acquire any shares of capital stock stock, other equity or voting interests of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants warrants, calls or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of dispose, acquire, repurchase, redeem or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtednessOptions), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to required by the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws bylaws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course ordinary course of Businessbusiness, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyaggregate;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease, sell and lease back, mortgage or otherwise encumber or dispose of, or agree to sell, lease, sell and lease back, mortgage or otherwise dispose of, any of its assets that have a value in excess (including any shares of $100,000 individually capital stock, equity or in excess of $500,000 in the aggregate during any calendar monthvoting interests or other rights, instruments or securities), except sales of inventory or obsolete assets in the Ordinary Course ordinary course of Businessbusiness;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modifymodify in any material respect, or terminateterminate or cancel, any material contract, agreement or commitmentcommitment or waive in any material respect any right to enforce, or relinquish, release, transfer or assign any rights or claims thereunder, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)Company;
(g) (x) except under its existing revolving credit facility as contemplated by Section 7.11 hereof or for borrowings incurred in effect on the date of this Agreement in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practicebusiness not to exceed $500,000, incur any additional indebtedness Indebtedness (including for this purpose any indebtedness Indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) ), or issue and sell options, warrants, calls or other rights to acquire any debt securities of the Company, enter into any “keep well” or other Contract to maintain any financial statement or similar condition of another person or enter into any arrangement having the economic effect of any of the foregoing, in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000500,000 or (y) make any loans, advances or capital contributions to, or investments in, any other Person;
(h) except as may be required as a result of a change in law Law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities Liabilities or results of operations of the Company and its SubsidiariesCompany;
(i) except in the Ordinary Course of Business(A) pay, discharge, settle or compromise satisfy any material pending or threatened suitclaims (including any claims of stockholders and any stockholder litigation relating to this Agreement, action or claim, other than settlements or compromises requiring payments by the Company Merger or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
other transaction contemplated by this Agreement or otherwise), Liabilities or obligations (j) paywhether absolute, discharge accrued, asserted or satisfy any material claimsunasserted, liabilities contingent or obligationsotherwise), other than the payment, discharge discharge, settlement or satisfaction in the Ordinary Course ordinary course of Business business of liabilities Liabilities reflected or reserved against in, or contemplated byin (for amounts not in excess of such reserves), the Company Financial Statements (or the notes thereto) or incurred since the date of such financial statements in the Ordinary Course ordinary course of Business business or relating to matters otherwise expressly permitted by clauses (d) or (e); (B) waive, relinquish, release, grant, transfer or assign any right of material value; or (C) waive any material benefits of, or arising from agree to modify in any adverse respect, or fail to enforce, or consent to any matter with respect to which its consent is required under, any confidentiality or similar Contract to or by which the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateCompany is a party or bound;
(kj) (x) grant or increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employeesemployees (or increase or accelerate the vesting or payment thereof), terminate, promote or change the title of any employees or other individual service providers, hire any new employees (other than to replace an employee whose employment has terminated)annual base salary exceeds $50,000, or pay any pension or retirement allowance not required by law Law or any existing plan Employee Benefit Plan or agreement Material Employment Agreement set forth on Section 4.13(a) of the Disclosure Schedule to any such employees, or (y) adopt, establish, become a party to, amend or amend, commit itself to or terminate any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employeeemployee or any agreement, plan, program or arrangement that would constitute an Employee Benefit Plan or Material Employment Agreement if it were in existence on the date hereof;
(k) (x) change its (A) Tax accounting methods, practices, or (B) Tax elections, (y) enter into any closing agreement, settle any audits, examinations or litigation with respect to Taxes, surrender any right to claim a refund of Taxes, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the Tax Liability of the Company for any period ending after the Closing Date or decreasing any Tax attribute of the Company existing on the Closing Date; or (z) consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company (with respect to this Section 6.1(k)(z), Parent’s consent is not to be unreasonably withheld, conditioned or delayed);
(l) change fiscal years;
(m) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company or any material Subsidiary of the Company;
(n) enter into any material collective bargaining agreement or other labor union Contract applicable to the employees of the Company;
(o) enter (or commit to enter) into, amend, terminate or extend any collective bargaining agreement (or enter into negotiations to do the foregoing);
(p) make or agree to make any new capital expenditures, or any obligations or Liabilities in connection therewith, other than capital expenditures to repair existing facilities or equipment either (A1) to maintain the establishment safety of terms any such facility or the materials stored therein in the ordinary course of employment business or (including compensation2) that are not in an amount in excess of newly hired employees $250,000 in the aggregate;
(q) sell, assign or exclusively license any material Owned IP Rights;
(r) enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee), or modify or amend in any material respect, or exercise any right to renew, any lease or sublease of real property or acquire any interest in real property;
(s) form any Subsidiary of the Company;
(t) enter into, extend or renew any Contract or amendment thereof which, if executed prior to the date of this Agreement, would have been required to have been disclosed pursuant to this Section 6.1;
(u) amend, modify or waive any of the Company’s existing takeover defenses or take any action to render any state takeover or similar statute inapplicable to any transaction other than executive officers the Merger;
(v) enter into any new line of business not related to foam, coatings and equipment targeted at commercial and industrial applications in the Ordinary Course insulation and construction industries;
(w) enter into, renew, materially amend or modify, or voluntarily terminate or rescind, exercise or decline any material option, request or grant any material waiver, or breach or default under any Real Property Lease;
(x) enter into or amend, supplement or modify, any Contract with any Affiliate, securityholder, director, employee or any immediate family member or Affiliate of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A any of the Codeforegoing;
(y) materially amend, ormodify or make any changes to coverage levels of, if subject to Section 409A terminate or let lapse any insurance policy of the CodeCompany;
(z) enter into or offer any rebates, to not result other than in the application ordinary course of the additional Tax thereunder business consistent with past practice;
(provided, that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in aa) except as contemplated by Section 6.1(k) 7.8 of the Disclosure Schedule;, enter into, amend, or otherwise modify any Contract with any financial advisor, legal advisor or any other third party advisor obligating the Company to pay any finder, brokers, success or other fees in connection with the transactions contemplated by this Agreement; or
(bb) take, or agree in writing or otherwise to take, any of the foregoing actions.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to occur of Section 8.1, except (i) the date of the termination of this Agreement or as may be required by Law, (ii) the Effective Timeas may be consented to in writing by Parent (which consent, shall not be unreasonably withheld, delayed or conditioned, provided that Parent may or may not provide such consent with respect to clauses (b)(ii), (d) and (e) below at its sole discretion), (iii) as may be expressly permitted pursuant to this Agreement, or (iv) as set forth in Section 6.1 of the Company shallDisclosure Letter, (x) the business of the Company and its subsidiaries shall be conducted only in, and such entities shall cause each not take any action except in the ordinary course of its Subsidiaries to, business and in a manner consistent with past practice in all material respects carry on its business in the regular and ordinary course andrespects, to the extent consistent therewith, (y) it shall use its commercially reasonable best efforts to preserve intact its current business organization, keep available the services of its the current executive officers and key employees of the Company and each of its subsidiaries and to preserve the current relationships of the Company and each of its relationships subsidiaries with customerseach of the distributors, franchisees, suppliers and others having other Persons with whom the Company or any of its subsidiaries has material business dealings relations and (z) it shall (and shall cause its subsidiaries to) comply with itapplicable Laws. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each not permit any of its Subsidiaries not subsidiaries to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) amend, waive or otherwise change, in any material respect, the Restated Certificate of Incorporation or the Bylaws of the Company (x) declare, set aside or pay any dividends on, such equivalent organizational or make any other actual, constructive or deemed distributions in respect of, governing documents of any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Optionssubsidiaries);
(b) (x) except for transactions among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries, or as otherwise contemplated in Section 6.1(e), issue, deliver, sell, pledge, dispose of dispose, encumber or otherwise encumber grant any shares of its or its subsidiaries’ capital stock, any other voting securities or equity equivalent or any securities convertible intooptions, or any rightswarrants, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent other rights of any kind to acquire any shares of its or its subsidiaries’ capital stock; provided, however that (other than for i) the issuance of Company may issue shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Restricted Stock Options (other than any acceleration occurring in connection with the Offer Unit or the Merger exercise of any Company Option, in each case outstanding as of the date hereof or as may be granted after the date hereof under this Section 6.1 to the extent disclosed in Section 4.3, and (ii) the Company may issue shares pursuant to the terms existing employment agreements and Company Benefit Plans in effect as of the applicable equity incentive plan date hereof, in each case, that have been disclosed or agreement governing the applicable Company Stock Option)made available to Parent;
(c) amend its Certificate of Incorporation declare, authorize, make, set aside, establish a record date for or By-laws pay any dividend or other organizational documentsdistribution, whether payable in cash, stock, property, a combination thereof or alter through mergerotherwise, liquidationwith respect to the Company’s or any of its subsidiaries’ capital stock, reorganization, restructuring other than dividends paid by any subsidiary of the Company to the Company or in any other fashion, the corporate structure or ownership of any Subsidiary wholly owned subsidiary of the Company;
(d) except as required by contractual commitments pursuant to existing on written agreements or pursuant to Company Benefit Plans in effect as of the date hereof, acquire in each case, that have been disclosed or made available to Parent, or as otherwise required by Law, (i) increase the compensation or other benefits payable or to become payable to any current or former employees, directors, executive officers or other service providers of the Company or any of its subsidiaries except in the ordinary course of business consistent with past practice (including, for this purpose, the normal salary, bonus, commission and equity compensation review process conducted each year), (ii) grant any incentive compensation opportunity or pay any incentive compensation or pay or agree to acquirepay any pension, retirement, allowance, severance, change of control or termination pay to, or enter into any severance, change of control or similar agreement with, any current or former employees, directors, executive officers, or other services providers of the Company or any of its subsidiaries, other than in the ordinary course of business consistent with past practice, (iii) enter into or amend any employment, consulting, bonus, retention, retirement or similar agreement with any employee or executive officer of the Company (including any change to performance targets associated therewith and except for employment agreements terminable on less than thirty (30) days’ notice without penalty), (iv) establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former employees, directors, executive officers, or other service providers or any of their beneficiaries, except, in each case, as would not result in an increase to the Company in the cost of maintaining such collective bargaining agreement, plan, trust, fund, policy or arrangement, (v) amend or adopt any Company Benefit Plans (other than any such adoption or amendment that does not increase the cost to the Company of maintaining such Company Benefit Plan) or (vi) accelerate the vesting or payment of or take any action to fund, any compensation or benefit (provided, however, that the Company and its subsidiaries may enter into or amend employment and consulting arrangements with officers, employees and consultants (other than the executive officers of the Company) in connection with promotions, new hires or engagements in the ordinary course of business;
(e) grant, confer or award, except for purchases as may be required under agreements executed prior to the date hereof (which such agreements are set forth in Section 6.1(e) of raw materialsthe Company Disclosure Letter and which grant, supplies, and inventory conference or award is made in the Ordinary Course of Business, by merging or consolidating withsecurities of, or by purchasing a substantial portion rights with respect to, the Company and not any subsidiary of the assets Company), options, convertible securities, restricted stock units or other rights to acquire any of its or its subsidiaries’ capital stock or take any action not otherwise contemplated by this Agreement to cause to be exercisable any otherwise unexercisable option under any existing stock plan (except as otherwise provided by the terms of any unexercisable options or other equity inawards outstanding on the date hereof (which such agreements are set forth in Section 6.1(e) of the Company Disclosure Letter) or otherwise permitted to be granted below);
(f) acquire (including by merger, consolidation, or by acquisition of stock or assets), except in respect of any other mannermerger, consolidation, business combination among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries, any business or interest in any corporation, partnership, association or limited liability company, other business organization or any division thereof or material amount of assets thereof, except with respect to acquisitions with collective purchase prices not exceeding $2,500,000 in the aggregate;
(g) incur any long-term Indebtedness or issue or sell any debt securities except for Indebtedness (i) incurred under the Company’s existing credit facilities as in effect as of the date of this Agreement and disclosed to Parent or incurred to replace, renew, extend, refinance or refund any existing Indebtedness (without increasing the principal amount thereof), (ii) for borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement (which such agreements are set forth in Section 6.1(g) of the Company Disclosure Letter), or (iii) incurred under letters of credit in the ordinary course of business;
(h) enter into, materially modify or amend, or terminate any Company Material Contract;
(i) make any material change to its methods of accounting in effect at December 31, 2010, except (i) as required by a concurrent change in GAAP (or any interpretation thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board, PCAOB or any similar organization), (ii) to permit the audit of the Company’s financial statements in compliance with GAAP, (iii) as required by a concurrent change in applicable Law or (iv) as disclosed in the Company SEC Documents;
(j) purchase, sell, transfer, license, assign, mortgage, encumber, abandon, fail to maintain or otherwise acquire dispose of any of the Company Intellectual Property Rights or agree to acquire any other properties or assets that have having a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to other than sales of inventoryinventory or non-exclusive licenses of Intellectual Property, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months andor commodity, if sales involve a new customerpurchase, are fully credit insured and with respect to purchases of raw materials and inventorysale or hedging agreements, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken each case in the ordinary course of the normal, day-to-day operations of the Company; andbusiness);
(ivk) does not require authorization by the Company’s board adopt a plan of directors complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.than among wholly owned subsidiaries);
(el) except to the extent required by contractual commitments existing on the date hereofcompromise, sell, lease or otherwise dispose of, settle or agree to sellsettle any pending or threatened suit, lease action, claim, obligation, proceeding or otherwise dispose ofinvestigation (including any suit, any action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), or consent to the same, other than compromises, settlements or agreements in the ordinary course of its assets business consistent with past practice that have a value in excess involve only the payment of $100,000 individually or monetary damages not in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessaggregate;
(fm) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, grant any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of Liens on the Company Company’s or any of its Subsidiaries ifsubsidiaries’ assets other than (i) in connection with Indebtedness permitted under clause (g) above or (ii) Permitted Liens;
(n) enter into any new line of business outside of the Company’s and its subsidiaries’ existing business segments;
(o) make any material Tax election or change any annual accounting period, file any material amended Tax Return, enter into any material closing agreement, settle any material claim or assessment, surrender any right to claim a material refund, offset or other reduction in liability or consent to any extension or waiver of the limitations period applicable to any claim or assessment, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected with respect to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)Taxes;
(gp) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred fail to maintain in full force and effect material insurance policies covering the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) Company and for hedging arrangement substantially its subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practice
(q) implement any employee layoffs that implicate the WARN Act; or
(r) agree to, incur make any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instrumentscommitment to, or secured by enter into any lien on any property, obligations under any title retention letter of intent or agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change principle with respect to do any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, the Company covenants and agrees that, unless Parent shall otherwise agree in writing, the Company shall conduct its business only in, and shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use reasonable commercial efforts to preserve substantially intact the business organization of the Company, to keep available the services of the present officers, employees, agents and consultants of the Company and to preserve the present relationships of the Company with customers, suppliers and other Persons with which the Company has significant business relations. By way of amplification and not limitation, except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, Company shall not, during the period from the date of this Agreement to and continuing until the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shalldirectly or indirectly do, and shall cause each of its Subsidiaries toor propose to do, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality any of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, following without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) amend or otherwise change the Company’s Certificate of Incorporation or Bylaws;
(xb) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) in the Company or any of its Affiliates;
(c) sell, transfer, lease to others or otherwise dispose of or subject to any encumbrance any material assets or properties of the Company or purchase, lease from others or otherwise acquire any material assets or properties (except for (i) purchases or sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) purchases or sales of immaterial assets not in excess of $20,000);
(d) (i) declare, set aside aside, make or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect of, of any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock stock, or (ziii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire acquire, or permit any shares of capital stock of the Company Person to purchase, repurchase, redeem or otherwise acquire, any of its Subsidiaries securities, including shares of Company Common Stock or Preferred Stock or any other securities thereof option, warrant or any rightsright, warrants directly or options indirectly, to acquire any such shares or other securities (except for the withholding of shares of Company Common Stock in connection with Taxes payable in respect of the exercise of Options)or Preferred Stock;
(be) (xi) issueacquire (by merger, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoconsolidation, or any rights, warrants acquisition of stock or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (yassets) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association partnership or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monththereof; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales incur any indebtedness for borrowed money, except for borrowings and reborrowing under the Company’s existing credit facilities or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of inventoryany Person, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months andor make any loans or advances, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of business consistent with past practice; (iii) authorize any capital expenditures or purchases of fixed assets which are, in the normalaggregate, day-to-day operations in excess of the amount set forth in Section 4.1 of the Company Disclosure Schedule for the Company; and
or (iv) does not require authorization by the Company’s board of directors (enter into or committee amend any contract, agreement, commitment or arrangement to effect any of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required matters prohibited by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Section 4.1(e);
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsmake any change in the rate of compensation, inventorycommission, supplies and obsolete assets, (i) amend bonus or otherwise modifyother remuneration payable, or terminatepay or agree or promise to pay, conditionally or otherwise, any material contractbonus, agreement extra compensation, pension or commitmentseverance or vacation pay, (ii) to any director, officer, employee, salesman or enter into any joint venture, lease or management agreement or other material agreement agent of the Company except in the ordinary course of business consistent with prior practice and pursuant to or any in accordance with plans disclosed in Section 2.14(b)(i) of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company Disclosure Schedule that were in effect as of the date of this Agreement or make any of its Subsidiaries of $100,000 per month individually and $500,000 per month increase in the aggregate (except for hedging arrangements in the Ordinary Course of Business)or commitment to increase any employee benefits, adopt or make any commitment to adopt any additional employee benefit plan or make any contribution, other than regularly scheduled contributions, to any Employee Benefit Plan;
(g) (x) except as contemplated by Section 7.11 hereof take any action to change accounting practices, policies or for borrowings incurred in the Ordinary Course of Business procedures (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent procedures with past practicerespect to revenue recognition, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases payments of accounts payable or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters collection of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000accounts receivable);
(h) except as may be required as a result of a change in law make any material tax election inconsistent with past practice or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending federal, state, local or threatened suitforeign Tax liability or agree to an extension of a statute of limitations, action or claim, other than settlements or compromises requiring payments by except to the extent the amount of any such settlement has been reserved for in the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregateFinancial Statements;
(ji) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction when due, in the Ordinary Course ordinary course of Business business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, in the Company Financial Statements (or the notes thereto) or incurred after the Company Balance Sheet Date in the Ordinary Course ordinary course of Business business and consistent with past practice;
(j) enter into any transaction, contract or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more commitment other than $100,000 individually and $500,000 per month in the aggregate;ordinary course of business; or
(k) (x) increase take, or agree in any manner the compensation and employee benefits of writing or otherwise to take, any of its directors, executive officers and other key employees, hire any new employees the actions described in Sections 4.1(a) through (other than to replace an employee whose employment has terminated)j) above, or pay any pension or retirement allowance not required by law or action which would make any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Code, or, if subject to Section 409A representations or warranties of the Code, to not result Company contained in the application of the additional Tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that this Agreement untrue or incorrect or prevent the Company and any of from performing or cause the Company not to perform its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;covenants herein.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in on Schedule 5.1, the Disclosure ScheduleCompany covenants and agrees that, during the period from the date of this Agreement prior to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, unless Parent shall otherwise agree in writing or except as expressly permitted or required pursuant to this Agreement, the Company shallshall not engage in any practice, take any action, or enter into any transaction outside the Ordinary Course of Business; and the Company shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to maintain and preserve intact its current business, facilities and assets, to maintain significant beneficial business organizationrelationships with suppliers, contractors, distributors, customers, licensors, licensees and others having business relationships with it, and to keep available the services of its current officers and employees employees, in each case to the end that the Company’s ongoing business shall not be impaired in any material respect at the Effective Time. By way of amplification and preserve its relationships with customersnot limitation, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated permitted by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly, do, or propose to do, any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) (x) 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, amend or otherwise make any payments to change its stockholders in their capacity as such, other than the regular quarterly dividend certificate of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine incorporation or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)bylaws;
(b) (x) issue, deliver, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance (including in each case by way of share split, combination or otherwise encumber reclassification) of any shares of its capital stock, or any other voting options, warrants, convertible securities or equity equivalent or other rights of any securities convertible intokind to acquire any shares of such capital stock, or any rightsother ownership interest (including any phantom interest), warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing Options and the applicable Company Stock Option)Warrants outstanding on the date of this Agreement;
(c) amend its Certificate of Incorporation declare, set aside, make or By-laws pay any dividend or other organizational documentsdistribution, payable in cash, stock, property or alter through mergerotherwise, liquidation, reorganization, restructuring or in with respect to any other fashion, the corporate structure or ownership of any Subsidiary of the Companyits capital stock;
(d) except as required by contractual commitments existing on the date hereofreclassify, acquire combine, split, subdivide or agree to redeem, purchase or otherwise acquire, except for purchases directly or indirectly, any of raw materialsits capital stock;
(e) acquire (including, supplies, and inventory in the Ordinary Course of Businesswithout limitation, by merging or consolidating withmerger, consolidation, or by purchasing a substantial portion acquisition of the assets of stock or equity in, or by assets) any other manner, any business or interest in any corporation, partnership, association or other business organization or any division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companymaterial assets;
(iif) with respect assign, lease, license, mortgage, pledge or otherwise subject to sales any encumbrance of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases any of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer ordersits material assets;
(iiig) is taken in the ordinary course of the normalforgive, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (cancel, compromise, waive or committee of the board of directors) and does not require release any other separate debts, claims or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthrights, except sales of inventory for debts, claims and rights forgiven, canceled, compromised, waived or obsolete assets released in the Ordinary Course of Business;
(fh) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, incur any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in indebtedness outside the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceor issue any debt securities or assume, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases guarantee or other similar instrumentsendorse, or secured by otherwise as an accommodation become responsible for, the obligations of any lien on person, or make any property, obligations under any title retention agreement and obligations under letters of credit loans or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesadvances;
(i) except make, authorize or commit for any capital expenditure or other capital additions or improvements in the Ordinary Course excess of Business$20,000, settle individually or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) payincrease the compensation payable or to become payable to its officers or employees, discharge except for increases in accordance with past practice in salaries or satisfy any material claims, liabilities or obligations, other than wages of employees of the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against inCompany, or contemplated bygrant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer or other employee of the Company Financial Statements 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, or otherwise make (or the notes theretobecome obligated to make) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including any bonus payments to advisorsany of its officers or employees in excess of $25,000, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month or in the aggregate;
(k) (x) increase enter into, adopt or amend in any manner the compensation and employee benefits of material respect any of its directorsemployment, executive officers and retention, change-in-control, collective bargaining, bonus or other key employeesincentive compensation, hire any new employees (profit-sharing, health or other than to replace an employee whose employment has terminated)welfare, stock option or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employeesother equity, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing vacation, severance, deferred compensation or welfare benefit plan or agreement or other employment, severance compensation or change in control agreement with benefit plan, policy, agreement, trust, fund or arrangement for the benefit of any employeeofficer, director or employee (whether or not legally binding);
(l) extend an offer of employment or consulting arrangement to any individual or entity, unless such offer relates to current consulting services of the Company that cannot be adequately performed by the Company’s existing employees or consultants and such offer is consistent with the Ordinary Course of Business;
(m) change any of its accounting practices, policies or principles, other than (A) the establishment of terms of employment (including compensation) of newly hired employees as required by GAAP or take any other adverse action, other than executive officers in the Ordinary Course of Business and Business, with respect to accounting policies or procedures;
(Bn) amendments sell any assets with a value in excess of $20,000 in the aggregate;
(o) enter into any contract or agreement material to employment agreements required to cause such agreements to the business, results of operations or financial condition of the Company outside the Ordinary Course of Business;
(p) other than in the Ordinary Course of Business, enter into any licensing, distribution, sponsorship, advertising, merchant program or other similar contracts, agreements, or obligations which may not be subject cancelled without penalties by the Company upon notice of 30 days or less;
(q) take any action to Section 409A cause, or fail to take any action to prevent, the accelerated vesting and exerciseability of the CodeOptions, orother than as required under the Option Plan (and except as otherwise permitted under this Agreement);
(r) make, change or revoke any material Tax election or make any material agreement or settlement regarding taxes with any Taxing authority;
(s) permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated;
(t) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(u) institute, settle or agree to settle any litigation, action or proceeding before any court or government body;
(v) enter into, amend or terminate any contract, agreement, commitment or arrangement that, if subject fully performed, would not be permitted under this Section 5.1; or
(w) knowingly take any action or omit to Section 409A of the Code, to not result in the application of the additional Tax thereunder (provided, take any action that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that the Company and would cause any of its Subsidiaries may pay cash bonuses representations and other cash incentive compensation warranties herein to become untrue in any material respect of calendar year 2016 or otherwise authorize, or enter into an agreement to the Persons and do anything in the amounts set forth in Section 6.1(kclauses (a) of the Disclosure Schedule;through (v).
Appears in 1 contract
Samples: Merger Agreement (Exelixis Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Tribe shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and consistent with past practice;
(xb) not (i) amend or propose to amend their respective certificates of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Tribe; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries exceed $2,700,000, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Option Plan or re-price any issued and outstanding options, (iii) make any acquisition of its Subsidiaries any assets or any businesses other securities thereof than expenditures for current assets in the ordinary course of business and expenditures for fixed or any rightscapital assets permitted pursuant to clause (h) below, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(biv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than (A) pledges or encumbrances pursuant to existing credit facilities or other permitted borrowings, (B) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the issuance buyer of shares upon the exercise of Options and for pledges such real estate, assets or facilities) to non-affiliates of the stock Company of the Subsidiaries less than $100,000; (C) sales or dispositions of the Company, including foreign Subsidiaries, which are required businesses or assets as may be required under by applicable law, and (D) sales or dispositions of assets in the existing ordinary course, (v) fail to keep and maintain all Permits in full force and effect and take all steps necessary to meet requirements on pending applications for permits or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by the terms of borrowings or indebtedness), (y) except as contemplated by this Agreement;
(f) not enter into, amend, waive modify or otherwise modify the terms of renew any such rightsemployment, warrants consulting, severance or optionssimilar agreement with, or (z) except as contemplated by this Agreementgrant any salary, accelerate the vesting of wage or other increase in compensation or increase in any Company Stock Options (employee benefit other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of any employment, consulting or similar agreement in effect on the applicable equity incentive plan date hereof to, any director or agreement governing officer of the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
its subsidiaries, except (di) except as for changes that are required by contractual commitments applicable law, (ii) to satisfy obligations existing on as of the date hereof, acquire or agree (iii) the agreement with Xxxxxxx Xxxxxxxxxx contemplated by Section 5.14 of this Agreement;
(g) not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as may be required or permitted by applicable law or by the terms of contractual obligations existing as of the date hereof, including any collective bargaining agreement;
(h) not make expenditures, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to acquiremake expenditures, except (i) expenditures which the Company or its subsidiaries are currently contractually committed to make, (ii) other expenditures for purchases ordinary operating expenses consistent with past practices, (iii) for emergency repairs and other expenditures necessary in light of raw materialscircumstances not anticipated as of the date of this Agreement which are necessary to avoid significant disruption to the Company’s business or operations consistent with past practice (and, suppliesif reasonably practicable, after consultation with Tribe), (iv) for repairs and inventory maintenance in the Ordinary Course ordinary course of Businessbusiness consistent with past practice, (v) expenditures for fixed or capital assets in the ordinary course of business, (vi) expenditures not exceeding $2 million for the acquisition by merging the Company’s joint venture of an 80 acre parcel for the Huron Potawatomi gaming project or consolidating with(vii) expenditures expressly permitted by this Agreement, including without limitation, payment for the Company D&O Liability Insurance Tail as provided in Section 5.11(d). With respect to the subject matter of this paragraph (h), if the Company requests approval of Tribe to exceed the limits set forth herein, Tribe shall respond to such request and grant or withhold approval promptly following receipt of such request;
(i) not make, change or revoke any material Tax election unless required by purchasing a substantial portion law or make any agreement or settlement with any taxing authority regarding any material amount of Taxes or which would reasonably be expected to materially increase the obligations of the assets of Company or equity in, the Surviving LLC to pay Taxes in the future;
(j) not settle or by compromise any other manner, any business litigation to which the Company or any corporationCompany subsidiary is a party or with respect to which the Company or any Company subsidiary may have or incur liability, partnership, association or other business organization or division thereof or otherwise acquire or agree at an aggregate cost to acquire any assets that have a value the Company in excess of $100,000 individually 50,000 with respect to any action or claim or in excess of $500,000 150,000 with respect to all applicable actions and claims in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyaggregate;
(iik) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course not change any of the normal, day-to-day operations of the Company; and
(iv) does not require authorization accounting principles or practices used by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law law, SEC guidelines or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(il) except in the Ordinary Course not terminate, modify, amend or waive compliance with any provision of Business, settle or compromise any material pending Contract or threatened suit, fail to take any action or claim, other than settlements or compromises requiring payments by necessary to preserve the benefits of any such material Contract to the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregatesubsidiaries;
(jm) paycomply with any laws, discharge ordinances or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, governmental regulations applicable to the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directorssubsidiaries, executive officers including but not limited to, the Gaming Laws and other key employeesany regulations promulgated thereunder, hire any new employees that may have a Company Material Adverse Effect; or
(other than to replace an employee whose employment has terminated)n) not take, or pay agree in writing or otherwise to take, any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Code, or, if subject to actions described in this 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;5.01.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company ----------------------------------------------------- covenants and agrees that, during the period from between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective Time, the business of each of the Company shalland its subsidiary shall be conducted only in, and shall cause each of the Company and its Subsidiaries tosubsidiary shall not take any action except in, in all material respects carry on its business in the regular and ordinary course and, to of business consistent with past practice. Each of the extent consistent therewith, Company and its subsidiary shall use its reasonable best efforts to preserve intact its current business organization, to keep available the services of its current officers and officers, employees and consultants, and to preserve its present relationships with customers, suppliers and others having other persons with which it has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement described in Schedule 4.1 or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):
(a) (x) 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 otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend------------ each of the Company and its subsidiary shall not, waive between the date of this Agreement and the Effective Time, directly or indirectly, do or propose or agree to do any of the following without the prior written consent of United: (a) amend or otherwise modify change its articles of incorporation or bylaws or equivalent organizational documents; (b) issue or authorize the terms issuance of, any shares of its capital stock of any such rightsclass, warrants or any options, warrants, convertible securities or (z) except as contemplated by this Agreement, accelerate the vesting other rights of any Company Stock Options (kind to acquire any shares of capital stock or other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
ownership interest; (c) amend its Certificate of Incorporation declare, set aside, make or By-laws pay any dividend or other organizational documentsdistribution, payable in cash, stock, property or alter through mergerotherwise, liquidation, reorganization, restructuring or in with respect to any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
its capital stock; (d) except as required by contractual commitments existing on the date hereofreclassify, acquire combine, split, subdivide or agree to redeem, purchase or otherwise acquire, except directly or indirectly, any of its capital stock; (e) acquire (including, without limitation, for purchases cash, or shares of raw materialsstock, supplies, and inventory in the Ordinary Course of Businessproperty or services, by merging merger, consolidation or consolidating with, acquisition of stock or by purchasing a substantial portion of the assets of or equity in, or by assets) any other manner, any business or interest in any corporation, partnership, association partnership or other business organization or division thereof or otherwise acquire or agree to acquire thereof; (f) incur any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken additional Indebtedness other than in the ordinary course of business consistent with past practices; (g) make any loans or advances to any person or entity or guarantee the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization Indebtedness of any nature person or entity, except in the ordinary course of business consistent with past practice; (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(eh) except to the extent required by contractual commitments existing on the date hereof, sell, lease dispose of or otherwise dispose of, or agree to sell, lease or otherwise dispose of, encumber any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, ; (i) amend or otherwise modifyenter into, modify or terminate, any material contractMaterial Contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month than in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
; (j) pay any bonus to or increase the compensation or benefits payable or to become payable to its employees, independent contractors or consultants; (k) pay, discharge or satisfy any material existing claims, liabilities or obligations, obligations other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business consistent with past practice; (l) increase or decrease prices charged to its customers, except for previously announced price changes and other price changes made in the ordinary course of liabilities reflected or reserved against inbusiness consistent with past practice, or contemplated by(m) agree, the Company Financial Statements (in writing or the notes thereto) otherwise, to take or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of authorize any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law the foregoing actions or any existing plan other action which would make any representation or agreement to any such employees, (y) become a party to, amend warranty in Article III untrue or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;incorrect. -----------
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement and the earlier of the Effective Time and the date, if any, on which this Agreement is validly terminated pursuant to Section 8.1, except (a) as may be required by applicable Law, (b) as may be agreed to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (c) as may be expressly required or permitted pursuant to this Agreement, or (d) as set forth in Section 6.1 of the Company Disclosure Letter, (x) the Company shall, and shall cause its Subsidiaries to, use their respective commercially reasonable efforts to conduct the business of the Company and its Subsidiaries in the ordinary course of business consistent with past practice, and the Company shall, and shall cause its Subsidiaries to, use their respective commercially reasonable efforts to preserve in all material respects their respective current business organizations and keep available the services of their respective key employees, and to preserve in all material respects their respective present relationships with key customers, suppliers and other Persons with which it has material business relations; provided that no action by the Company or its Subsidiaries with respect to the earlier to occur matters specifically addressed by any provision of this Section 6.1 shall be deemed a breach of this sentence, unless such action would constitute a breach of such relevant provision; and (y) the Company shall not, and shall not permit any of its Subsidiaries to:
(a) amend or otherwise change the Company Certificate of Incorporation or the Company By-Laws (or such equivalent organizational or governing documents of any of its Subsidiaries);
(b) split, combine, reclassify, redeem, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests or rights (except in connection with (i) the date acceptance of shares of Company Common Stock as payment for the per share exercise price of the termination Company Options or as payment for Taxes incurred in connection with the exercise, vesting and/or settlement of Company Equity Awards, in each case, in accordance with the applicable Company Stock Plan, or (ii) the forfeiture of Company Equity Awards);
(c) issue, sell, pledge, dispose, encumber or grant any shares of its or its Subsidiaries’ capital stock or other equity interests, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its Subsidiaries’ capital stock or equity interests, except for transactions among the Company and its direct or indirect wholly owned Subsidiaries or among the Company’s direct or indirect wholly owned Subsidiaries; provided, however, that the Company may issue shares of Company Common Stock upon the exercise of any vested Company Option or settlement of any other Company Equity Award that becomes vested, in either case, (i) as is outstanding as of the date of this Agreement or (ii) as may be granted after the Effective Timedate of this Agreement in accordance with Section 6.1(f);
(d) authorize, declare, pay or make any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than dividends paid by any wholly owned Subsidiary of the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality Company or any wholly owned Subsidiary of the foregoing, and Company;
(e) except as otherwise expressly contemplated by this Agreement or as required pursuant to existing written Company Benefit Plans set forth in the Disclosure Schedules, and subject to the provisions Section 4.12(a) of Section 7.5 and Article IX, the Company shall notDisclosure Letter or otherwise required by Law, and shall cause each (i) increase the compensation payable or to become payable or benefits provided or to be provided to (A) any current or former member of its the Company Board or any of the board of directors of any of the Company’s Subsidiaries not to, without or (B) any current or former employee or independent contractor of the prior written consent of Parent (which shall not be unreasonably withheld):
(a) (x) declare, set aside Company or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stockSubsidiaries, except, in the ordinary course of business of the Company consistent with past practice, to any current employee of the Company or its Subsidiaries with an annual base salary of less than one hundred fifty thousand dollars ($150,000), (ii) except for severance or termination benefits under applicable Company Benefit Plans set forth on Section 4.12(a) of the Company Disclosure Letter granted to newly hired employees hired to fill vacancies in the ordinary course of business of the Company consistent with past practice, grant the opportunity to participate in any severance or termination pay plans, (iii) establish, adopt, enter into, materially amend or terminate any Company Benefit Plan (or any arrangement which in existence as of the date of this Agreement would constitute a Company Benefit Plan), or otherwise make any payments to its stockholders in their capacity as suchother plan, other than trust, fund, policy or arrangement for the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance benefit of any other securities in respect current or former directors, officers or employees of, in lieu of or in substitution for shares of its capital stock or (z) purchaseother service providers to, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof of their respective beneficiaries, (iv) hire or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent terminate (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required cause) any employee or may be required under the existing terms of borrowings or indebtednessconsultant (who is a natural person), other than the hiring of replacements on substantially similar terms as similarly-situated individuals or the hiring or termination of individuals with an annual base salary of less than, or which is expected to be less than, one hundred fifty thousand dollars (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options$150,000), or (zv) except as contemplated by this Agreementloan or advance any money or any other property to any present or former director, accelerate the vesting of any Company Stock Options officer, employee or consultant (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms who is a natural person) of the applicable equity incentive plan Company or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of BusinessSubsidiaries;
(f) except as permitted required pursuant to existing written Company Benefit Plans set forth in Section 4.12(a) of the Company Disclosure Letter (i) grant, confer or award any Company Equity Awards or other equity-based awards, convertible securities or any other rights to acquire any of the Company’s, or any of its Subsidiaries’, capital stock, whether settled in cash or shares of Company Common Stock or (ii) take any action to accelerate the vesting, funding or payment of, or lapsing of restrictions with respect to, any equity-based compensation or other long-term incentive compensation under any Company Stock Plan;
(g) (i) acquire (including by clauses (d) merger, consolidation, or acquisition of stock or assets), except in respect of any merger, consolidation, business combination among the Company and (e) above its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, any corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof, except with respect to raw materialsacquisitions with collective purchase prices not exceeding one and a half million dollars ($1,500,000) in the aggregate, inventoryor (ii) sell, supplies lease, license, abandon, encumber or otherwise subject to a Lien other than a Permitted Lien (disregarding clause (iii) of the definition of Permitted Lien) or otherwise dispose of any properties, rights or assets of the Company or its Subsidiaries having a value exceeding one and obsolete assetsa half million dollars ($1,500,000) individually or in the aggregate; other than (A) sales of inventory in the ordinary course of business consistent with past practice, (B) abandonment or permitting to lapse or be cancelled any Intellectual Property Rights (other than those that are material to the business) and non-exclusive licenses of Intellectual Property Rights, in each case, in the ordinary course of business or (C) pursuant to agreements existing as of the date of this Agreement to the extent made available to Parent or Acquisition Sub;
(h) (i) amend repurchase, redeem, defease, cancel, prepay, forgive, issue, sell or otherwise modifyincur, or terminateamend in any material respect the terms of, any material contract, agreement indebtedness for borrowed money or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement debt securities of the Company or any of its Subsidiaries, or assume or guarantee or otherwise become responsible for any such indebtedness for any Person (other than a Subsidiary), except for (A) any prepayment of indebtedness in connection with the repayment and discharge of the Company Debt pursuant to Section 6.13 and (B) indebtedness incurred or commitments to extend credit obtained (1) (I) under the Company’s existing credit facilities (other than the BofA Loan Agreement) or any other Company Material Contract in existence prior to the date hereof and disclosed in Section 6.1(h)(i) of the Company Disclosure Letter, (II) under the BofA Loan Agreement or any credit facilities established in replacement thereof pursuant to clause (B)(1)(III) below and (III) to replace, renew, extend, refinance or refund the aggregate amount of commitments (whether drawn or undrawn) under the BofA Loan Agreement in an aggregate amount not to exceed two hundred million dollars ($200,000,000) (plus unpaid accrued interest thereon, and underwriting discounts, fees, commissions and expenses associated with such replacement, renewal, extension, refinancing or refunding); provided that, with respect to any incurrence of indebtedness incurred after the date hereof and pursuant to clauses (B)(1)(I), (II) and (III) above, that would, after giving effect to such incurrence, when aggregated with all other such outstanding indebtedness incurred in reliance upon such clauses, exceed one million dollars ($1,000,000), the Company shall inform and discuss with Parent within a reasonable time prior to the incurrence of any such indebtedness and Company shall notify Parent of the primary reason for such incurrence prior to such incurrence, (2) under capital leases, purchase money financing, equipment financing and letters of credit in the ordinary course of business consistent with past practice or (3) between or among the Company and/or any of its Subsidiaries ifin the ordinary course of business consistent with past practice or (ii) make any loans, advances or capital contributions to, or investments in, any Person, except for loans, advances, capital contributions, or investments made (A) pursuant to any Company Material Contract in existence as of the date hereof and disclosed in Section 6.1(h)(ii) of the Company Disclosure Letter, or (B) between or among the Company and/or any of its Subsidiaries in the ordinary course, consistent with past practice;
(i) enter into, modify, amend, cancel or terminate any Company Material Contract or any Contract that, if in effect on the date of this Agreement, would be a Company Material Contract other than (x) in the ordinary course of business or (y) in connection with (A) the replacement, renewal, extension, refinancing, refunding, repayment and/or discharge of indebtedness pursuant to Section 6.1(h) or (B) any amendment or modification to, or waiver or consent under, the BofA Loan Agreement and/or Portuguese Loan Agreements pursuant to Section 6.12;
(j) make any material change to (x) its methods of accounting in effect as of March 31, 2019, except (i) as required by GAAP (or any interpretation thereof), Regulation S-X or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization), or (ii) as required by a change in applicable Law or (y) the security of its information technology systems in any matter materially adverse to the business of the Company and its Subsidiaries, except as required by applicable Law;
(k) adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(l) settle or compromise any litigation, suit, action, proceeding or investigation other than settlements or compromises of litigation, suits, actions, proceedings or investigations in the ordinary course of business consistent with past practice where the amount paid in settlement or compromise, in each case, does not exceed the amount set forth in Section 6.1(l) of the Company Disclosure Letter and which do not impose any material restrictions on the operations or businesses of the Company or its Subsidiaries, taken as a whole;
(m) incur, authorize or commit to incur capital expenditures in the aggregate in any period in excess of the aggregate amount of capital expenditures for such contractperiod set forth in the capital expenditures budget set forth in Section 6.1(m) of the Company Disclosure Letter;
(n) other than as required by applicable Law or GAAP, agreement(i) make any material change to any method of Tax accounting, commitment(ii) make, venturerevoke or change any material Tax election, lease (iii) surrender any claim for a refund of material Taxes, (iv) enter into any closing agreement with respect to any material Taxes, (v) amend any material Tax Return, (vi) settle or management agreement involves compromise any material Tax liability, (vii) seek any material Tax ruling from any Tax authority or could reasonably be expected (viii) consent to involve any extension or waiver of the receipt limitation period applicable to any material Taxes;
(o) effect or payment by permit a plant closing or mass layoff under the WARN Act;
(p) voluntarily recognize any labor union, works council or similar organization as the representative body of any employees of the Company or any of its Subsidiaries Subsidiaries, or enter into a collective bargaining or other Contract with respect to such organization;
(q) (i) enter into or amend in any manner any Contract with any Company Related Party (other than the Company or its Subsidiaries) or any other Person covered under Item 404 of $100,000 per month individually and $500,000 per month in Regulation S-K under the aggregate Securities Act or (except for hedging arrangements in ii) make any payment to any Affiliate of the Ordinary Course Company or any other Person covered under Item 404 of BusinessRegulation S-K under the Securities Act (other than any payments pursuant to contracts made available to Parent prior to the date of this Agreement or as permitted by Section 6.1(e));
(gr) adopt a stockholder rights plan, “poison pill” or similar agreement that is, or at the Effective Time will be, applicable to this Agreement, the Merger or the other transactions contemplated by this Agreement; or
(xs) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly otherwise permitted by clauses (da) or through (e)r) above, or arising from the Transactions, including payments enter into any agreement to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Kemet Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective Time, the business of the Company shallshall be conducted only in, and the Company shall cause each of its Subsidiaries tonot take any action except in, in all material respects carry on its business in the regular and ordinary course andof business, to the extent consistent therewith, with past practice. The Company shall use its reasonable best efforts to preserve intact its current business organization, to keep available the services of its current officers and officers, employees and consultants, and to preserve its present relationships with customers, suppliers and others having other persons with which it has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):
(a) (x) 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 otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amendthe Company shall not, waive between the date of this Agreement and the Effective Time, directly or indirectly, do or propose or agree to do any of the following without the prior written consent of Republic:
(a) amend or otherwise modify change its articles of incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or, authorize the terms issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of its capital stock of any such rightsclass, warrants or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest, of it or (zii) any of its assets, tangible or intangible, except as contemplated by this Agreement, accelerate in the vesting ordinary course of any Company Stock Options business consistent with past practice (other than any acceleration occurring in connection with the Offer or the Merger pursuant except for distributions to the terms Shareholders of the applicable equity incentive plan or agreement governing the applicable Company Stock Optioncertain assets more particularly described in Schedule 4.1(b) attached hereto);
(c) amend its Certificate of Incorporation declare, set aside, make or By-laws pay any dividend or other organizational documentsdistribution, payable in cash, stock, property or alter through mergerotherwise, liquidation, reorganization, restructuring or with respect to any of its capital stock (except for distributions to the Shareholders in any other fashion, amounts reasonably necessary for the corporate structure or ownership of any Subsidiary Shareholders to pay taxes with respect to the taxable income of the Company, which amounts are consistent with past practices of the Company);
(d) except as required by contractual commitments existing on the date hereofreclassify, acquire combine, split, subdivide or agree to redeem, purchase or otherwise acquire, except directly or indirectly, any of its capital stock;
(i) acquire (including, without limitation, for purchases cash or shares of raw materials, supplies, and inventory in the Ordinary Course of Businessstock, by merging or consolidating withmerger, consolidation, or by purchasing a substantial portion acquisition of the assets of stock or equity in, or by assets) any other manner, any business or interest in any corporation, partnership, association partnership or other business organization or division thereof or otherwise acquire any assets, or agree to acquire make any assets that have a value in excess investment either by purchase of $100,000 individually stock or in excess securities, contributions of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1capital or property transfer, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in natureor, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of the normalbusiness, day-to-day operations consistent with past practice, purchase any property or assets of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate Person, (ii) incur any indebtedness for borrowed money or special authorization issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose ofPerson, or agree to sellmake any loans or advances, lease or otherwise dispose of, (iii) enter into any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 Contract other than in the aggregate during any calendar monthordinary course of business, except sales of inventory or obsolete assets in the Ordinary Course of Businessconsistent with past practice;
(f) subject to the provisions of any agreements referenced on Schedule 3.17C, increase the compensation payable or to become payable to its officers or employees, or, except as permitted by clauses (d) and (e) above with respect presently bound to raw materialsdo, inventorygrant any severance or termination pay to, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement or other material agreement of the Company or any of its Subsidiaries ifdirectors, in each caseofficers or other employees, such contractor establish, adopt, enter into or amend or take any action to accelerate any rights or benefits which any collective bargaining, bonus, profit sharing, trust, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any directors, officers or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employees;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action other than in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially in a manner consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases practice with respect to accounting policies or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000procedures;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material existing claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice of due and payable liabilities reflected or reserved against inin its financial statements, as appropriate, or contemplated by, liabilities incurred after the Company Financial Statements (or the notes thereto) or incurred date hereof in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, business and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement consistent with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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)past practice; provided, however, that the Shareholders may, at their option, provide the Company and with additional capital to be applied by the Company to increase Working Capital;
(i) other than in the ordinary course of its business, increase or decrease prices charged to its customers, except for previously announced price changes, or take any other action which might reasonably result in any material increase in the loss of customers through non-renewal or termination of service contracts or other causes; or
(j) agree, in writing or otherwise, to take or authorize any of its Subsidiaries may pay cash bonuses and other cash incentive compensation the foregoing actions or any action which would make any representation or warranty in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;Article III untrue or incorrect.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as The Company covenants and agrees that, prior to the Effective Time, unless Parent shall otherwise expressly agree in writing or except in connection with the transactions contemplated by this Agreement or Agreement:
(a) Except as set forth in the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date SECTION 5.1 of the termination of this Agreement or (ii) the Effective TimeCompany Disclosure Letter, the businesses of the Company shalland the Company Subsidiaries shall be conducted only in the ordinary and usual course of business and consistent with past practices, and the Company and the Company Subsidiaries shall cause each of its Subsidiaries to, in use all material respects carry on its reasonable efforts to maintain and preserve intact their respective business in the regular and ordinary course andorganizations, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current their respective officers and employees and preserve its to maintain significant beneficial business relationships with suppliers, contractors, distributors, customers, suppliers licensors, licensees and others having business dealings relationships with it. ; and
(b) Without limiting the generality of the foregoingforegoing SECTION 5.1(a), and except as otherwise expressly contemplated by this Agreement or as set forth in SECTION 5.1 of the Company Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXLetter, the Company shall notnot directly or indirectly, and shall cause each not permit any of its the Company Subsidiaries not to, without do any of the prior written consent of Parent (which shall not be unreasonably withheld):following:
(ai) acquire, sell, lease, transfer or dispose of any assets or securities or enter into any material commitment or transaction, in each case out of the ordinary course of business consistent with past practice;
(xii) amend or propose to amend its certificate of incorporation or bylaws or, in the case of the Company Subsidiaries, their respective constituent documents;
(iii) split, combine or reclassify any outstanding shares of, or interests in, its capital stock;
(iv) declare, set aside or pay any dividends ondividend or distribution, payable in cash, stock, property or make any other actual, constructive or deemed distributions in otherwise with respect of, to any of its capital stock;
(v) redeem, purchase or otherwise make acquire or offer to redeem, purchase or otherwise acquire any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any shares of its capital stock or issue any options, warrants or authorize rights to acquire capital stock of the issuance Company;
(vi) except for the Company Common Stock issuable upon exercise of options outstanding on the date hereof and except for up to 10,000 shares of Company Common Stock issuable under the OEA, Inc. Directors Compensation Plan and the OEA, Inc. 1997 Employee Stock Purchase Plan, issue, sell, pledge, dispose of or encumber, or authorize, propose or agree to the issuance, sale, pledge or disposition or encumbrance by the Company or any of the Company Subsidiaries 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, its capital stock of any class, or any other securities in respect of, in lieu of of, or in substitution for shares any class of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock of outstanding on the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)date hereof;
(bvii) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any existing indebtedness for borrowed money or incur any indebtedness for borrowed money or issue any debt securities, except indebtedness incurred in the ordinary course of business, but only if the amount of such rightsindebtedness, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (when added to all other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms indebtedness of the applicable equity incentive plan or agreement governing Company then outstanding (determined in accordance with GAAP), does not exceed the applicable Company Stock Option)sum of (a) the total amount of indebtedness outstanding on January 31, 2000, and (b) $10,000,000;
(cviii) amend its Certificate assume, guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of Incorporation or By-laws or any other organizational documentsperson, or alter through merger, liquidation, reorganization, restructuring make any loans or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquireadvances, except to the Company Subsidiaries or except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value those not in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyaggregate;
(iiix) authorize, recommend or propose any material change in its capitalization, or any release or relinquishment of any material contract right;
(x) take any action with respect to sales the grant of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are or increase in excess of requirements for customer ordersany severance or termination pay;
(iiixi) is taken adopt or establish any new employee benefit plan or amend in any material respect any employee benefit plan or increase the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (compensation or committee of the board of directors) and does not require any other separate or special authorization fringe benefits of any nature employee (that is, is in accordance with the authority delegated to the person making the decision other than non-officers and non-management personnel) or taking the action.
(e) except to the extent pay any material benefit not required by contractual commitments any existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessemployee benefit plan;
(fxii) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) enter into or amend or otherwise modify, or terminate, in any material contractrespect any employment, consulting, severance or indemnification agreement entered into or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment made by the Company or any of its the Company Subsidiaries with any of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof their respective directors, officers, agents, consultants or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceemployees, incur or any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases collective bargaining agreement or other similar instruments, obligation to any labor organization or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit employee incurred or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments entered into by the Company or any of its Subsidiaries the Company Subsidiaries, except for such amendments to consulting agreements entered into in the ordinary course;
(xiii) make or change any material tax election, enter into any closing agreement relating to taxes, consent to any waiver of the statute of limitations for any claim or assessment relating to taxes, or settle or compromise any liability for taxes or compromise, settle or otherwise resolve other litigation or legal proceedings involving a payment of no more than $100,000 individually and $500,000 per month 250,000 in any one case by or to the aggregateCompany or any of the Company Subsidiaries;
(jxiv) pay, discharge make or satisfy commit to make capital expenditures in excess of 10% (ten percent) over the aggregate budgeted amount set forth in the Company's fiscal 2000 capital expenditure plan previously provided to Parent;
(xv) adopt any material accounting method relating to taxes or make any material changes in its reporting for taxes or accounting procedures other than as required by GAAP or applicable law;
(xvi) other than in the ordinary course of business, pay or discharge any claims, liens or liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no involving more than $100,000 individually and or $500,000 per month in the aggregate, which are not reserved for on the balance sheet included in the Company Financial Statements;
(kxvii) write off any accounts or notes receivable except in the ordinary course of business;
(xxviii) increase knowingly take, or agree to commit to take, any action that would or is reasonably likely to result in any manner of the compensation and employee benefits conditions to the Offer or any conditions of the Merger not being satisfied, or would make any representation or warranty of the Company contained in herein inaccurate in any material respect at, or as of any of its directorstime prior to, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated)the Effective Time, or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for that would materially impair the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A ability of the CodeCompany, Parent, Merger Sub or the holders of Shares to consummate the Offer or the Merger in accordance with the terms hereof or materially delay such consummation; or
(xix) enter into or modify any contract, if subject agreement, commitment or arrangement to Section 409A do any 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in Initial Schedule 4.1 or the Disclosure ScheduleSEC Reports filed prior to the date of this Agreement, or as otherwise consented to in writing in advance by Parent, which consent shall not be unreasonably withheld, conditioned or delayed, and subject to applicable law, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, use their respective commercially reasonable best efforts to carry on their respective businesses in all material respects carry on its business in, and not enter into any material transaction other than in accordance with, the regular and ordinary course and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve intact its their current business organizationorganizations, keep available the services of its their current officers and employees and preserve its their relationships with customers, suppliers and others having business dealings with itthem. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement, from the date of this Agreement or as set forth in until the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXEffective Time, the Company shall not, and shall cause each not permit any of its Subsidiaries not subsidiaries to, without the prior written consent of Parent Parent, which consent, in the case of clauses (which e), (f) (g), (i), (j), (k), (l) and (n) (in reference to any of the foregoing clauses), shall not be unreasonably withheld):, conditioned or delayed:
(a) (xi) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions distribution in respect of, any of its capital stock, or otherwise make any payments to its stockholders of the Company in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share dividends payable to stockholders the Company of record on a date no earlier than March , 2017any direct or indirect wholly-owned subsidiary of the Company declared by any of the Company’s direct or indirect subsidiaries, (yii) split, combine or reclassify any of its capital stock 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 (ziii) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for than, in the case of the Company, the issuance of shares of Common Stock upon the exercise of Stock Options and for pledges or Warrants or delivery of shares of Common Stock in respect of the stock lapse of restrictions on shares of Restricted Stock, in each case as outstanding on the Subsidiaries date of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring Agreement in connection accordance with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Optiontheir current terms);
(c) amend or change its Certificate certificate of Incorporation incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companybylaws;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets assets, in each case that have a value in excess of $100,000 are material, individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1aggregate, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.Company and its subsidiaries taken as a whole;
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 are material, individually or in excess of $500,000 in the aggregate during any calendar monthaggregate, except sales of inventory or obsolete assets in to the Ordinary Course of BusinessCompany and its subsidiaries taken as a whole;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, make any material contract, agreement or commitment, (ii) commitment or enter into any joint venturecontract or agreement except (i) in the ordinary course of business consistent with past practice or (ii) for capital expenditures to be made in fiscal 2006 as identified in a capital expenditure budget previously delivered by the Company to Parent;
(g) incur any third-party indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of third parties, lease except for borrowings or management agreement guarantees incurred in the ordinary course of business consistent with past practice under financing arrangements in existence on the date hereof, or make any loans, advances or capital contributions to, or investments in, any other person, other than to the Company or any wholly-owned subsidiary of the Company or other material agreement than in the ordinary course of business consistent with past practice;
(h) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)Subsidiaries;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(hi) except as may be required as a result of a change in law or in U.S. GAAPpursuant to generally accepted accounting principles, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesit;
(ij) except in the Ordinary Course of Businessas required by law, make any material tax election or settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregateincome tax liability;
(jk) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements financial statements (or the notes thereto) of the Company or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practice;
(k) (xl) increase in any manner the compensation and employee or fringe benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) or become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control employment agreement with or for the benefit of any employee, other than increases in the compensation of employees who are not officers or directors of the Company made in the ordinary course of business consistent with past practice, or (A) except pursuant to the establishment of terms of employment preexisting plans or agreements) accelerate the vesting of any compensation or benefit;
(including compensationm) except in connection with the exercise of newly hired employees other than executive officers in its fiduciary duties by the Ordinary Course Board of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A Directors of the CodeCompany, waive, amend or allow to lapse any term or condition of any confidentiality or “standstill” agreement to which the Company or any subsidiary is a party; or
(n) take, if subject or agree in writing or otherwise to Section 409A take, any of the Code, to not result in the application foregoing actions or any action which would make any of the additional Tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that representations or warranties of the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation contained in respect of calendar year 2016 to this Agreement untrue or incorrect at the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;Effective Time.
Appears in 1 contract
Samples: Merger Agreement (Net2phone Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier of the Effective Time and the date, if any, on which this Agreement is terminated in accordance with Section 8.1 (such period, the “Pre-Closing Period”), except (a) as required by Law, (b) as may be consented to occur in writing by Parent (not to be unreasonably withheld, conditioned or delayed), (c) as may be required in accordance with this Agreement or (d) as set forth in Section 5.1 of the Company Disclosure Letter, (i) the date Company will, and will cause each Company Subsidiary to, conduct the business of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business Company Subsidiary in the regular and ordinary course of business and in a manner consistent with past practice and, to the extent consistent therewith, use its reasonable best efforts to preserve its assets and business organization intact in all material respects and maintain its current existing business organization, keep available the services of its current officers relations and employees and preserve its relationships goodwill with customers, suppliers suppliers, licensors, distributors, Governmental Authorities, independent contractors, employees, business partners and others having material business dealings relationships with it. Without it and (ii) without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXclause (i) above, the Company shall will not, and shall will cause each of its Subsidiaries Company Subsidiary not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) (x) 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, amend or otherwise make any payments to its stockholders in their capacity as such, other than change the regular quarterly dividend Certificate of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, Incorporation or the Bylaws (y) split, combine or reclassify any of its capital stock such similar organizational or issue or authorize the issuance governing documents of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of OptionsSubsidiary);
(b) adjust, split, reverse split, combine, subdivide, reclassify, redeem, purchase, repurchase or otherwise acquire, directly or indirectly, or amend, the Company’s or any Company Subsidiary’s securities, including any options, equity or equity-based compensation, warrants, convertible securities or other rights of any kind to acquire any of such securities;
(xc) issue, deliver, sell, pledge, modify, transfer, dispose of of, encumber or otherwise encumber any shares of its capital stockgrant, or authorize the same with respect to, directly or indirectly, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company’s or any Company Subsidiary’s securities, including foreign Subsidiariesany options, which are required equity or may be required under the existing terms of borrowings equity-based compensation, restricted stock, restricted stock units, warrants, convertible Securities or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms other rights of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree kind to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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)securities; provided, however, that the Company and any may issue Shares (i) upon the exercise of its Subsidiaries may pay cash bonuses and other cash incentive compensation Company Options or vesting or settlement of Company RSUs, in respect of calendar year 2016 to the Persons and in the amounts set forth in each case, as disclosed on Section 6.1(k3.2(a) of the Company Disclosure ScheduleLetter and (ii) upon the exercise of the Warrants outstanding as of the date of this Agreement in accordance with the applicable terms of such Warrant;
(d) declare, set aside, authorize, make or pay any dividend or other distribution payable in cash, stock, property or otherwise with respect to the Company’s or any Company Subsidiary’s securities;
(e) (i) establish, adopt, enter into, amend, or terminate any Benefit Plan, or any plan, program, policy, practice, agreement or other arrangement that would be a Benefit Plan if it had been in existence on the date of this Agreement (other than offer letters that provide for at-will employment without any severance or change in control benefits) other than amendments that have an immaterial impact on cost to a Benefit Plan that is a broad-based employee benefit plan, (ii) grant or pay any bonus, incentive, change in control, retention, severance, termination, or profit-sharing award or payment, or increase the base salary and/or cash bonus opportunity or other compensation of any director, officer, employee, or independent contractor of the Company or any Company Subsidiary, except in each case, (A) as required by Law or required in accordance with a Benefit Plan in effect as of the date of this Agreement, so long as such Benefit Plan has been disclosed as of the date of this Agreement on the Company Disclosure Letter or (B) any such action taken in the ordinary course of business consistent with past practice with respect to the compensation of any non-officer employee whose annual base salary does not exceed $200,000 after giving effect to such increase (including, for the avoidance of any doubt, any such increase as a result of an employee’s promotion), (iii) except as required by any Benefit Plan in existence or adopted in accordance with this Agreement, accelerate or take any action to accelerate any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any current or former director, officer, employee, or consultant of the Company or any Company Subsidiary, (iv) communicate with the employees of the Company or any Company Subsidiary with respect to the compensation, benefits or other treatment they will receive following the Effective Time, unless such communication is (A) approved by Parent in advance of such communication or (B) required by Law or (v) except as may be required by GAAP, materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Benefit Plan or materially change the manner in which contributions to such plans are made or the basis on which such contributions are determined;
(f) hire, engage, promote or terminate the employment or engagement of (other than for cause, death or disability) any employee or individual independent contractor who will earn annual base compensation in excess of $200,000;
(g) take any action requiring notice to employees, or triggering any other obligations, in accordance with the WARN Act or any similar state, local or foreign Law;
(h) make any loan or advance to (other than travel and similar advances to its employees in the ordinary course of business and consistent with past practice), or capital contribution to, or investment in, any Person (other than any wholly owned Company Subsidiary) in excess of $200,000 in the aggregate;
(i) forgive any loans or advances to any officers, employees or directors of the Company or any Company Subsidiary, or any of their respective Affiliates, or change its existing borrowing or lending arrangements for or on behalf of any of such Persons in accordance with an employee benefit plan or otherwise, except in the ordinary course of business in connection with relocation activities to any employees of the Company or any Company Subsidiary;
(j) acquire (including by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership, limited liability company, joint venture, other business organization, any division of any of the foregoing, any equity interest in any of the foregoing, any real estate or all or any material portion of the assets, business or properties of any Person;
(i) sell, pledge, dispose of, transfer, abandon, lease, license, mortgage, incur any Lien (other than Permitted Liens) (including under any sale-leaseback transaction or an asset securitization transaction) on or otherwise transfer or encumber any portion of the tangible or intangible assets, business, properties or rights of the Company or any Company Subsidiary except sales of product inventory in the ordinary course of business and consistent with past practice, in each other than (A) the imposition of liens or encumbrances under the Company’s Existing Credit Agreements and which will be released in connection with the consummation of the transactions contemplated hereby or (B) or as otherwise provided in Section 5.1(u)(i), (ii) enter into any new line of business or (iii) create any new Subsidiary;
(l) (i) pay, discharge or satisfy any Indebtedness that has a prepayment cost, “make whole” amount, prepayment penalty or similar obligation (other than Indebtedness incurred by the Company or any wholly owned Company Subsidiary and owed to the Company or any wholly owned Company Subsidiary) or (ii) cancel any material Indebtedness (individually or in the aggregate) or settle, waive or amend any claims or rights of substantial value ;
(m) (i) incur, create, assume or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for any Indebtedness, including by the issuance of any debt security, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for any Indebtedness of any Person, including by the issuance of any debt security and the assumption or guarantee of obligations of any Person (or enter into a “keep well” or similar arrangement) or (iii) issue or sell any debt securities of the Company or any Company Subsidiary, including options, warrants, calls or other rights to acquire any debt securities of the Company or any Company Subsidiary;
(n) negotiate, amend, extend, renew, terminate or enter into, or agree to any amendment or modification of, or waive, release or assign any rights in accordance with, any Company Material Contract, any Contract that would have been a Company Material Contract had it been entered into prior to the date of this Agreement or any Lease for any Company Leased Real Property, except, in the case of any Contract of the type described in Sections 3.13(a)(i), 3.13(a)(iv) and 3.13(a)(vii), in the ordinary course of business consistent with past practice; provided, however, that the foregoing exception will not apply to any Contract that requires or provides for any new consent, acceleration, termination or any other material right or consequence triggered in whole or in part by the Merger or any of the other transactions contemplated hereby;
(o) negotiate, amend, modify, extend, enter into or terminate any Labor Agreement;
(p) make any material change to its or any Company Subsidiary’s methods, policies and procedures of accounting, except as required by GAAP or Regulation S-X of the Exchange Act;
(q) make or agree to make any capital expenditure exceeding $500,000 in the aggregate;
(r) write up, write down or write off the book value of any material assets, except to the extent required by GAAP;
(s) agree to or otherwise commence, release, compromise, assign, settle or resolve, in whole or in part, any threatened or pending Proceeding or insurance claim, other than settlements that result solely in monetary obligations involving payment (without the admission of wrongdoing) by the Company or any Company Subsidiary of an amount not greater than $200,000 (net of insurance proceeds) in the aggregate;
(t) fail to use reasonable best efforts to maintain in effect material insurance policies covering the Company and each Company Subsidiary and their respective properties, assets and businesses;
(i) sell, transfer, assign, lease, license or otherwise dispose of (whether by merger, stock or asset sale or otherwise) to any Person any rights to any Company Intellectual Property material to the Company and each Company Subsidiary, taken as a whole (other than licensing non-exclusive rights for the primary purpose of (A) conducting clinical research, entered into with a clinical research organization, (B) material transfer, sponsored research or other similar matters, (C) establishing confidentiality or non-disclosure obligations, (D) conducting clinical trials or (E) manufacturing, labeling or selling the Company’s or any Company Subsidiary’s products), (ii) cancel, dedicate to the public, disclaim, forfeit, reissue, reexamine or abandon without filing a substantially identical counterpart in the same jurisdiction with the same priority or allow to lapse (except with respect to Patents expiring in accordance with their terms or permitted to lapse in the ordinary course of business consistent with past practice) any Company Intellectual Property, (iii) fail to make any filing, pay any fee, or take any other action necessary to prosecute and maintain in full force and effect any Company Registered IP (other than non-material items permitted to lapse in the ordinary course of business consistent with past practice), (iv) make any change in Company Intellectual Property that is or would reasonably be expected to materially impair such Company Intellectual Property or the Company’s or any Company Subsidiary’s rights with respect thereto, (v) disclose to any Person (other than Representatives of Parent and Sub), any Trade Secrets, know-how or confidential or proprietary information, except, in the case of confidential or proprietary information, in the ordinary course of business to a Person that is subject to confidentiality obligations or (vi) fail to take or maintain reasonable measures to protect the confidentiality and value of Trade Secrets included in the Company Owned IP;
(v) except as required by Law, (i) make or change any material Tax election or adopt or change any material method of Tax accounting, (ii) file any material amended Tax Return, (iii) settle or compromise any audit, assessment or other Proceeding relating to a material amount of Taxes, (iv) agree to an extension or waiver of the statute of limitations with respect to federal income Taxes or other material Taxes, (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of any Law) with respect to any material Tax, (vi) surrender any right to claim a material Tax refund or (vii) take or permit any action or engage in any transaction outside the ordinary course of business from the date of this Agreement through the Effective Time which could give rise to a material U.S. income inclusion under Section 951 of the Code with respect to any Subsidiary that is a “controlled foreign corporation” as defined in Section 957 of the Code;
(w) merge or consolidate the Company or any Company Subsidiary with any Person or adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary; or
(x) enter into any agreement, contract, commitment or arrangement to do, or adopt any resolutions approving or authorizing, or announce an intention to do, any of the foregoing.
Appears in 1 contract
Samples: Merger Agreement (Invuity, Inc.)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated permitted by clauses (a)(i) through (xxviii) of this Agreement or as set forth in the Disclosure ScheduleSection 4.1, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course of its business in substantially the same manner as currently conducted and, to the extent consistent therewith, use its all commercially reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with itit to the end that its goodwill and ongoing business shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject Company Letter (with specific reference to the provisions of Section 7.5 and Article IXapplicable subsection below), prior to the Effective Time:
(a) The Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which which, in the case of clauses (vi), (vii), (x), (xii), (xiii), (xv), (xvii), (xviii), (xix), (xx), (xxi), (xxiii), (xxiv), (xxvi) and (xxvii) shall not be unreasonably withheld):, conditioned or delayed) which consent shall be presumed in the event such action is approved by a majority of the directors designated by Parent pursuant to Section 1.3 hereof:
(ai) (xA) 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 otherwise make any payments to its stockholders shareholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yB) split, combine or reclassify any of its capital stock 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 stock, or (zC) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for other than the withholding redemption or repurchase at cost of shares repurchased from employees upon termination of Common Stock in connection with Taxes payable in respect of the exercise of Optionsemployment);
(b) (xii) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Company Stock Option Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for the issuance of shares Shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring outstanding on the date of this Agreement in connection accordance with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)their current terms;
(ciii) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the CompanyCompany Charter;
(div) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken not in the ordinary course of business;
(v) alter through merger, liquidation, reorganization, restructuring or any other fashion the normal, day-to-day operations corporate structure of any Subsidiary of the Company; andCompany (other than any wholly owned Subsidiary or foreign Subsidiary that would be wholly owned but for a nominal number of director or similar shares being owned by a foreign national as required by the law of the jurisdiction of such foreign Subsidiary's organization);
(ivvi) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets, except other than sales of inventory or obsolete other assets made in the Ordinary Course ordinary course of Businessbusiness consistent with past practice;
(fvii) incur any Indebtedness in an amount greater than $250,000 in the aggregate, guarantee any such Indebtedness or make any loans, advances or capital contributions to, or other investments in, any other Person (other than in transactions between or among the Company and its Subsidiaries or loans, advances, capital contributions or other investments of less than $100,000, all if made in the ordinary course of business consistent with past practice or pursuant to the terms of any Company Plan;
(viii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the Merger) or otherwise permit its corporate existence, or any of the rights or franchises or any license, permit or authorization under which the business operates to be suspended, lapsed or revoked;
(ix) except as permitted by clauses (dprovided in Section 4.1(a)(ix) of the Company Letter and (e) above except for amendments necessary or appropriate to comply with respect to raw materialsany Applicable Law, inventoryincluding tax qualification requirements and Section 409A of the Code, supplies and obsolete assets, (i) amend enter into or otherwise modifyadopt any, or terminateamend any existing, any material contractseverance plan, agreement or commitment, (ii) arrangement or enter into or amend any joint ventureCompany Plan, lease employment agreement, or management agreement or other material agreement any consulting agreement, provided, however, that no amendment to comply with Section 409A of the Code shall materially increase the costs of the Company or any Subsidiary, result in a loss of its Subsidiaries ifdeductibility, in each caseor provide a "gross-up" of any income tax, such contractadditional tax, agreement, commitment, venture, lease interest or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)penalties;
(g) (x) except as contemplated by provided in Section 7.11 hereof 4.1(a)(x) of the Company Letter or as otherwise provided in this Agreement, hire additional employees, consultants or other independent contractors or increase the compensation payable or to become payable to its directors, officers or employees (except for borrowings incurred increases in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur practice in salaries or wages of employees of the Company who are not officers of the Company) or grant any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases severance or other similar instrumentstermination pay to, or secured by enter into any lien on employment or severance agreement with, any propertydirector or officer of the Company, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangementsestablish, in the aggregateadopt, having a value in excess of $100,000;
(h) enter into, or, except as may be required or appropriate to comply with Applicable Law, including tax qualification requirements and Section 409A of the Code, amend in any material respect or take action to enhance in any material respect or accelerate any rights or benefits under, any labor, 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, provided, however, that no amendment to comply with Section 409A of the Code shall materially increase the costs of the Company or any Subsidiary, result in a loss of deductibility, or provide a "gross-up" of any income tax, additional tax, interest or penalties;
(xi) knowingly violate or knowingly fail to perform any obligation or duty imposed upon it by any applicable material federal, state or local law, rule, regulation, guideline or ordinance;
(xii) make any change to accounting policies or procedures (other than actions required to be taken by generally accepted accounting principles);
(xiii) prepare or file any Tax Return inconsistent with its past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods;
(xiv) fail to file in a timely manner any Tax Returns (except as to filings for which a result of a change in law proper extension has been obtained) that become due or in U.S. GAAPfail to pay any Taxes that become due;
(xv) make any express or deemed election relating to Taxes that is inconsistent with its past practices, rescind any express or deemed election relating to Taxes or change any of the accounting principles its methods of reporting income or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesdeductions for Tax purposes;
(ixvi) except in the Ordinary Course of Business, commence any litigation or proceeding with respect to any material Tax liability or settle or compromise any material pending Tax liability or threatened suit, action commence any other litigation or claim, proceedings (other than settlements for the routine collection of amounts owed) or compromises requiring payments settle or compromise any other material claims or litigation (other than in circumstances where (A) the costs of settlement are fully covered by insurance, existing loss reserves, or a combination of both, and (B) the Company or any terms of its Subsidiaries of no more than $100,000 individually settlement are limited to cash payment and $500,000 per month in the aggregatecustomary releases);
(jxvii) except for sales of inventory in the ordinary course of business and the hiring of employees in the ordinary course of business as permitted in subsection (x), enter into, renew, terminate or amend any Material Contract; or purchase or lease any real property;
(xviii) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction satisfaction, in the Ordinary Course ordinary course of Business business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements most recent financial statements (or the notes thereto) of the Company included in the Financial Statements or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practice;
(kxix) create or form any Subsidiary or make any other investment in another Person (xother than short term investments for the purpose of cash management or as otherwise permitted in subsection (vii));
(xx) increase modify the standard warranty terms for products sold by the Company or amend or modify any product warranties in effect as of the date hereof in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 is adverse to the Persons and in the amounts Company;
(xxi) except as set forth in Section 6.1(k4.1(a)(xxi) of the Disclosure ScheduleCompany Letter, make or authorize any new capital expenditure or expenditures that individually is in excess of $200,000 or in the aggregate are in excess of $500,000;
(xxii) allow any of the Company's Intellectual Property rights relating to the Company's existing products or products currently under development to be disclosed, other than under appropriate non-disclosure agreements, abandoned, or otherwise become unavailable to the Company on the same terms and conditions as such rights were available to the Company as of the date of this Agreement;
(xxiii) (A) enter into any exclusive license, distribution, marketing or sales agreements; (B) enter into any commitment to any person to (1) develop software without charge, (2) incorporate any software into any of the Company's products other than pursuant to valid license agreements executed in the ordinary course of business with royalty rates and license terms consistent with past practice, or (3) enter into any license, distributorship, or sales agreement that by its terms would purport to relate to any of the products of Parent or its affiliates; (C) sell, transfer or otherwise dispose of any Intellectual Property other than sales of its products and other non-exclusive licenses that are in the ordinary course of business and consistent with past practices, or (D) grant "most favored nation" pricing to any Person;
(xxiv) allow any insurance policy relating to the Company's business to be amended or terminated without replacing such policy with a policy providing at least substantially equal coverage, insuring comparable risks and issued by an insurance company financially comparable to the prior insurance company;
(xxv) except as provided in Section 5.5 with respect to Company Stock Options, enter into or amend any contract, agreement, commitment or arrangement with any Affiliated Person;
(xxvi) fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;
(xxvii) knowingly take any action that would result in a failure to maintain trading of the Shares on The Nasdaq National Market; or
(xxviii) authorize, recommend, propose (other than in a request to Parent or Sub for consent) or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(b) The Company shall:
(i) maintain its assets and properties in the ordinary course of business in the manner historically maintained, reasonable wear and tear, damage by fire and other casualty excepted;
(ii) promptly repair, restore or replace all assets and properties in the ordinary course of business consistent with past practice;
(iii) upon any damage, destruction or loss to any of its assets or properties, apply any and all insurance proceeds, if any, received with respect thereto to the prompt repair, replacement and restoration thereof;
(iv) comply in all material respects with all Applicable Laws;
(v) take all actions necessary to be in compliance in all material respects with all Material Contracts and to maintain the effectiveness of all Company Permits;
(vi) notify Parent in writing of the commencement of any action, suit, claim, investigation or other like proceeding by or against the Company; and
(vii) pay accounts payable and pursue collection of its accounts receivable in the ordinary course of business, consistent with past practices. ARTICLE V
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and consistent with past practice;
(xb) not (i) amend or propose to amend their respective certificates of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock, or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or borrowings under the existing credit facilities of the Company or of any of its subsidiaries up to the existing borrowing limit on the date hereof, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed $______________, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Plans, (iii) make any acquisition of any assets or any businesses other than expenditures for current assets for fixed or capital assets in each case in the ordinary course of its Subsidiaries or any other securities thereof or any rightsbusiness, warrants or options to (iv) without Parent's consent, acquire any such shares or other securities gaming property, (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance (A) sales of shares upon the exercise of Options and for pledges businesses or assets disclosed in Section 5.01 of the stock Company Disclosure Schedule, (B) pledges or encumbrances pursuant to existing credit facilities or other permitted borrowings, (C) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the buyer of such real estate, assets or facilities) to non-affiliates of the Subsidiaries Company of less than $______________ in each such case and $____________ in the Companyaggregate, including foreign Subsidiaries, which are required (D) sales or dispositions of businesses or assets as may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplieslaw, and inventory in the Ordinary Course (E) sales or dispositions of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness, day-to-day operations or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the extent required services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any terms of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Agreement;
(f) not enter into, amend, modify or renew any employment, consulting, severance or similar agreement with, or grant any salary, wage or other increase in compensation or increase in any employee benefit to, any director or officer of the Company or of any of its subsidiaries, except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitmentfor changes that are required by applicable law, (ii) or enter into any joint venture, lease or management agreement or other material agreement to satisfy obligations existing as of the Company date hereof, or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month (iii) in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business)business consistent with past practice;
(g) (x) except not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as contemplated may be required by Section 7.11 hereof applicable law or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceterms of contractual obligations existing as of the date hereof, incur including any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000collective bargaining agreement;
(h) not make expenditures, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to make expenditures, except (i) expenditures which the Company or its subsidiaries are currently contractually committed to make, (ii) other expenditures not exceeding $_____________ in the aggregate, (iii) for emergency repairs and other expenditures necessary in light of circumstances not anticipated as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles date of this Agreement which are necessary to avoid significant disruption to the Company's business or practices used by it materially affecting operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), or (iv) for repairs and maintenance in the reported consolidated assetsordinary course of business consistent with past practice. With respect to the subject matter of this paragraph (h), liabilities or results of operations of if the Company requests approval of Parent to exceed the limits set forth herein, Parent shall respond to such request and its Subsidiariesgrant or withhold approval promptly following receipt of such request;
(i) except in the Ordinary Course of Businessnot make, settle change or compromise revoke any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not Tax election unless required by law or make any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance settlement with any taxing authority regarding any material amount of Taxes or change in control agreement with which would reasonably be expected to materially increase the obligations of the Company or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers Surviving Corporation to pay Taxes in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;future.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of (i) the date of the termination of Effective Time and the date, if any, on which this Agreement is terminated in accordance with Section 7.1, except (A) as may be required by Law, (B) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (C) as may be expressly contemplated or permitted pursuant to this Agreement or (iiD) as set forth on Section 5.1 of the Effective TimeCompany Disclosure Letter, (x) the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on conduct the business of the Company and its business Subsidiaries in the regular and ordinary course of business and in a manner consistent with past practice and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current assets and business organization, keep available the services of organization and maintain its current officers and employees and preserve its existing relationships with material customers, suppliers suppliers, distributors, regulators and others having business dealings with it. Without limiting the generality of the foregoingpartners, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (y) the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):directly or indirectly:
(a) amend the Certificate of Incorporation or the Bylaws of the Company (x) declare, set aside or pay any dividends on, such equivalent organizational or make any other actual, constructive or deemed distributions in respect of, governing documents of any of its capital stockSubsidiaries);
(b) adjust, split, combine, subdivide, reclassify, redeem, repurchase or otherwise make any payments to its stockholders in their capacity as such, other than acquire or amend the regular quarterly dividend terms of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine the Company’s or reclassify any of its Subsidiaries’ capital stock or issue other equity interests or authorize the issuance any options, equity or equity-based compensation, warrants, convertible securities or other rights of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise kind to acquire any shares of the Company’s or any of its Subsidiaries’ capital stock or other equity interests;
(c) issue, sell, pledge, dispose, encumber, grant or authorize the same with respect to, any shares of the Company’s or its Subsidiaries’ capital stock or other equity interests, or any options, equity or equity-based compensation, warrants, convertible securities or other rights of any kind to acquire any shares of the Company’s or any of its Subsidiaries’ capital stock or other equity interests; provided, however, that the Company may issue shares (i) upon the settlement of any Company RSU Award or Company DSU Award outstanding as of the date of this Agreement or (ii) pursuant to the terms of the Company ESPP in effect immediately prior to the date of this Agreement;
(d) except with respect to the regular quarterly cash dividends of $0.21 per share, with record and payment dates for such dividends consistent with past practice, declare, set aside, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than cash dividends and distributions paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Company;
(e) (i) establish, adopt, enter into any new, amend, terminate, or take any action to accelerate rights under, any Company Benefit Plan or plan, program, policy, practice, agreement or arrangement that would be a Company Benefit Plan if it had been in effect on the date of this Agreement, except to the extent required pursuant to any Company Benefit Plan; (ii) grant or pay, or commit to grant or pay, any bonus, incentive or profit-sharing award or payment; (iii) increase, or commit to increase, the amount of the wages, salary, bonuses, commissions, fringe benefits, severance or other compensation (including equity or equity-based compensation, whether payable in stock, cash or other property), benefits or remuneration payable to any current or former employee or director of, or individual service provider to, the Company or any Subsidiary of the Company, except for annual increases in base salaries to employees whose annual base compensation is below $150,000, in the ordinary course of business and in amounts and at such times as is consistent with past practice; (iv) take any action (other than actions contemplated by this Agreement) to accelerate any payment or benefit, the vesting of any equity or equity-based award or the funding of any payment or benefit, payable or to become payable to any current or former employee or director of, or individual service provider to, the Company or any Subsidiary of the Company; (v) except pursuant to, or as contemplated by, any agreement set forth on Section 3.12(j) of the Company Disclosure Letter, enter into any employment, severance, change in control, retention, individual consulting or similar agreement with any current or former employee or director of, or individual service provider to, the Company or any Subsidiary of the Company (other than offer letters that provide for at-will employment without any severance, retention or change in control benefits for newly hired employees or individual service providers who are hired in the ordinary course of business and whose annual base compensation does not exceed $225,000 individually), (vi) communicate with the employees of the Company or any Subsidiary of the Company regarding the compensation, benefits or other treatment they will receive following the Effective Time, unless such communications are consistent with the terms provided herein; or (vii) except as may be required by GAAP, materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or materially change the manner in which contributions to such plans are made or the basis on which such contributions are determined;
(f) hire, engage, promote or terminate (other than for cause) any employee or other individual service provider who is or would be entitled to receive annual base compensation of $225,000 or more;
(g) except as contemplated by the Company ESPP in effect as of the date of this Agreement, grant, confer or award equity or equity-based compensation, options, convertible securities, restricted stock, restricted stock units, deferred stock units or other rights to acquire any of the Company’s or its Subsidiaries’ capital stock or other equity interests;
(h) make any loan or advance (other than travel and similar advances to its employees in the ordinary course of business) to any Person in excess of $50,000 in the aggregate;
(i) forgive any loans or advances to any officers, employees or directors of the Company or its Subsidiaries, or any of their respective Affiliates, or change its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to an employee benefit plan or otherwise, except in the ordinary course of business in connection with relocation activities of any employees of the Company or its Subsidiaries;
(j) acquire (including by merger, consolidation or acquisition of stock or assets) any corporation, partnership, limited liability company, joint venture, other business organization or any division or all or any material portion of the assets, business or properties of any other Person, in each case, for aggregate consideration in excess of $20,000,000;
(k) sell, pledge, dispose of, transfer, abandon, lease, license, mortgage, incur any Lien (other than Permitted Liens) (including pursuant to a sale-leaseback transaction or an asset securitization transaction) on or otherwise transfer or encumber any material portion of the assets, business, properties or rights of the Company or any of its Subsidiaries (other than licenses of Intellectual Property Rights in the ordinary course of business consistent with past practice), except (i) sales of inventory in the ordinary course of business and consistent with past practice, (ii) transfers among the Company and its Subsidiaries or any other securities thereof (iii) disposition of obsolete assets or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)expired inventory;
(bl) (xi) issuepay, deliverdischarge or satisfy any Indebtedness that has a prepayment cost, sell“make whole” amount, pledge, dispose of prepayment penalty or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent similar obligation (other than for (A) the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Companypayment, including foreign Subsidiariesdischarge or satisfaction, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan Company’s Existing Credit Agreement as in effect as of the date of this Agreement and (B) Indebtedness incurred by the Company or agreement governing its wholly owned Subsidiaries and owed to the applicable Company Stock Option)or its wholly owned Subsidiaries) or (ii) cancel any material Indebtedness (individually or in the aggregate) or waive or amend any claims or rights of substantial value;
(cm) amend its Certificate of Incorporation (i) incur, create, assume or By-laws otherwise become liable for any Indebtedness or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in guarantee any other fashion, the corporate structure or ownership such Indebtedness of any Person (other than a wholly owned Subsidiary of the Company;
(d) except as required by contractual commitments existing on ), including the date hereofissuance of any debt security and the assumption or guarantee of obligations of any Person or issue or sell any debt securities or options, acquire or agree to acquirewarrants, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association calls or other business organization or division thereof or otherwise acquire or agree rights to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement debt securities of the Company or any of its Subsidiaries ifSubsidiaries’ (except for (A) Indebtedness or guarantees for drawdowns with respect to the Company’s revolving credit facility under its Existing Credit Agreement in the ordinary course of business consistent with past practice and (B) Indebtedness owed to the Company or its wholly owned Subsidiaries) or (ii) make any loans, advances or capital contributions to, or investments in, any other Person (other than to or in the Company or any direct or indirect wholly owned Subsidiary of the Company);
(n) terminate, enter into, agree to any material amendment or modification of or renew or waive any material rights under any Company Material Contract or any Contract relating to Company Leased Real Property, in each casecase other than Company Material Contracts of the type described in Sections 3.14(a)(i), such contract(ii), agreement(v), commitment(vi), venture(xii) or (xv) in the ordinary course of business consistent with past practice;
(o) modify, lease extend or management agreement involves enter into any Labor Agreement, except as required pursuant to an applicable Contract in effect as of the date of this Agreement;
(p) make any material change to its methods of accounting, except as required by GAAP (or could reasonably be expected any interpretation thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization);
(q) make or agree to involve make any capital expenditure exceeding $25,000,000 in the receipt aggregate in any calendar quarter;
(r) write up, write down or write off the book value of any material assets, except to the extent required by GAAP;
(s) release, compromise, assign, settle or agree to settle any Proceeding (including any Proceeding relating to this Agreement or the Merger and the other transactions contemplated by this Agreement with adverse parties other than the other parties hereto) or insurance claim, other than settlements that result solely in monetary obligations involving payment (without the admission of wrongdoing) by the Company or any of its Subsidiaries of (i) the amounts specifically reserved in accordance with GAAP with respect to such Proceeding on the Company’s consolidated financial statements for the year ending December 31, 2015 or (ii) an amount not greater than $100,000 per month individually and $500,000 per month 5,000,000 in the aggregate (except for hedging arrangements in the Ordinary Course of Business)aggregate;
(gt) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred fail to maintain in effect the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of existing material insurance policies covering the Company and its Subsidiaries and their respective properties, assets and businesses;
(u) announce, implement or effect any facility closing, lay-off, early retirement programs, severance programs or reductions in force affecting employees of the Company or any of its Subsidiaries, other than any such action not giving rise to more than $250,000 in severance and other liability related to such action;
(v) cancel, dedicate to the public, disclaim, forfeit, reexamine or abandon without filing a substantially identical counterpart in the same jurisdiction with the same priority or allow to lapse (except with respect to patents expiring in accordance with their terms) any Intellectual Property Rights material to the Company;
(i) except in the Ordinary Course make or change any material Tax election or change any method of Business, Tax accounting; (ii) file any material amended Tax Return; (iii) settle or compromise any audit or Proceeding unless such settlement or compromise does not result in a Tax liability that materially exceeds the liability with respect to such audit or Proceeding recorded or reflected in the Company SEC Documents prior to the date hereof; (iv) agree to an extension or waiver of the statute of limitations with respect to a material pending amount of Taxes; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or threatened suitany similar provision of state, local or non-U.S. Law) with respect to any material Tax; or (vi) surrender any right to claim a material Tax refund;
(x) take (or knowingly fail to take) any action, including consenting to any action pursuant to the KLX Tax Sharing Agreement that would cause (i) the KLX External Spin-Off to fail to qualify for the KLX Spin-Off Tax Treatment or claim(ii) the KLX Internal Restructuring to fail to qualify for the Tax treatments originally reported on the relevant Tax Returns of the Company, other than settlements KLX or compromises requiring payments by any applicable Subsidiary of either;
(y) merge or consolidate the Company or any of its Subsidiaries with any third party or adopt a plan of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) paycomplete or partial liquidation, discharge dissolution, restructuring, recapitalization or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course reorganization of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire Subsidiaries; or
(z) enter into any new employees (other than agreement to replace an employee whose employment has terminated)do, or pay adopt any pension or retirement allowance not required by law or resolutions in support of, any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and consistent with past practice, including with respect to casino credit policies;
(xb) not (i) amend or propose to amend their respective certificates of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or borrowings under the existing credit facilities of the Company or of any of its subsidiaries up to the existing borrowing limit on the date hereof, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed $______________, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Option Plans, (iii) make any acquisition of any assets or any businesses other than expenditures for current assets in the ordinary course of its Subsidiaries business and expenditures for fixed or any other securities thereof or any rightscapital assets in the ordinary course of business, warrants or options to (iv) without Parent's consent, acquire any such shares or other securities gaming property in the State of Colorado, (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance (A) sales of shares upon the exercise of Options and for pledges businesses or assets disclosed in Section 5.01 of the stock Company Disclosure Schedule, (B) pledges or encumbrances pursuant to Existing Credit Facilities or other permitted borrowings, (C) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the buyer of such real estate, assets or facilities) to non-affiliates of the Subsidiaries Company of less than $______________ in each such case and $____________ in the Companyaggregate, including foreign Subsidiaries, which are required (D) sales or dispositions of businesses or assets as may be required under by applicable law, and (E) sales or dispositions of assets in the existing ordinary course or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by the terms of borrowings or indebtedness), (y) except as contemplated by this Agreement;
(f) not enter into, amend, waive modify or otherwise modify renew any employment, consulting, severance or similar agreement with, or grant any salary, wage or other increase in compensation or increase in any employee benefit to, any director or officer of the terms Company or of any such rightsof its subsidiaries, warrants or options, or except (zi) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as for changes that are required by contractual commitments applicable law, (ii) to satisfy obligations existing on as of the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance business consistent with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)past practice;
(g) (x) except not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as contemplated may be required by Section 7.11 hereof applicable law or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceterms of contractual obligations existing as of the date hereof, incur including any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000collective bargaining agreement;
(h) not make expenditures, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to make expenditures, except (i) expenditures which the Company or its subsidiaries are currently contractually committed to make, (ii) other expenditures not exceeding $____________ individually or $_____________ in the aggregate, (iii) for emergency repairs and other expenditures necessary in light of circumstances not anticipated as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles date of this Agreement which are necessary to avoid significant disruption to the Company's business or practices used by it materially affecting operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), or (iv) for repairs and maintenance in the reported consolidated assetsordinary course of business consistent with past practice. With respect to the subject matter of this paragraph (h), liabilities or results of operations of if the Company requests approval of Parent to exceed the limits set forth herein, Parent shall respond to such request and its Subsidiariesgrant or withhold approval promptly following receipt of such request;
(i) except in the Ordinary Course of Businessnot make, settle change or compromise revoke any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not Tax election unless required by law or make any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance settlement with any taxing authority regarding any material amount of Taxes or change in control agreement with which would reasonably be expected to materially increase the obligations of the Company or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers Surviving Corporation to pay Taxes in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;future.
Appears in 1 contract
Samples: Merger Agreement (Diversified Opportunities Group LTD)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated permitted by clauses (i) through (xvii) of this Agreement or as set forth in the Disclosure ScheduleSection 4.1, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course of its business as currently conducted and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and key employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject Company Letter (with specific reference to the provisions of Section 7.5 and Article IXapplicable subsection below), the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(ai) (xA) other than dividends paid by wholly-owned Subsidiaries, 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 otherwise make any payments to its stockholders in their capacity as such, (B) other than in the regular quarterly dividend case of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March any Subsidiary, 2017, (y) split, combine or reclassify any of its capital stock 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 (zC) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (xii) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Company Stock Option Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for (A) the issuance of shares of Company Common Stock upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options outstanding on the date of this Agreement in accordance with their current terms and (other than any acceleration occurring in connection with B) the Offer or the Merger issuance of shares of Company Common Stock pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)Option Agreement;
(ciii) amend its Certificate of Incorporation the Company Charter or Byby-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companylaws;
(div) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any material assets that have a value in excess outside of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; andbusiness;
(ivv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthmaterial assets, except other than sales of inventory or obsolete assets that are in the Ordinary Course ordinary course of Businessbusiness consistent with past practice;
(fvi) incur any indebtedness for borrowed money, guarantee any such indebtedness or make any loans, advances or capital contributions to, or other investments in, any other person, other than (A) in the ordinary course of business consistent with past practices and (B) indebtedness, loans, advances, capital contributions and investments between the Company and any of its wholly-owned Subsidiaries or between any of such wholly-owned Subsidiaries, in each case in the ordinary course of business consistent with past practices;
(vii) alter (through merger, liquidation, reorganization, restructuring or in any other fashion) the corporate structure or ownership of the Company or any Subsidiary;
(viii) except as permitted by clauses (dprovided in Section 4.1(viii) and (e) above with respect to raw materialsof the Company Letter, inventory, supplies and obsolete assets, (i) amend enter into or otherwise modifyadopt any, or terminateamend any existing, any material contractseverance plan, agreement or commitment, (ii) arrangement or enter into or amend any joint ventureCompany Plan, lease employment agreement (with an employee at or above management level), or any consulting agreement out of the ordinary course;
(ix) except as provided in Section 4.1(ix) of the Company Letter, increase the compensation payable or other material agreement to become payable to its directors, officers or employees (except for increases in the ordinary course of business consistent with past practice in salaries or wages of employees of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by who are not officers of the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(gSubsidiaries) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur grant any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases severance or other similar instrumentstermination pay to, or secured by enter into any lien on employment or severance agreement with, any property, obligations under any title retention agreement and obligations under letters director or officer of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries Subsidiaries, or establish, adopt, enter into, or, except as may be required to comply with applicable law, amend in any material respect or take action to enhance in any material respect or accelerate any rights or benefits under, any labor, 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 no more than $100,000 individually and $500,000 per month in the aggregateany director, officer or employee;
(jx) knowingly violate or knowingly fail to perform any material obligation or duty imposed upon it or any Subsidiary by any applicable federal, state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other than actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any material Tax Return inconsistent with its past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods;
(xiii) make or rescind any express or deemed material election relating to Taxes or change any of its methods of reporting income or deductions for Tax purposes;
(xiv) commence any litigation or proceeding with respect to any material Tax liability or settle or compromise any material Tax liability without Parent's consent (which consent should not be unreasonably withheld) or commence any other litigation or proceedings or settle or compromise any other material claims or litigation;
(xv) enter into, renew, terminate or amend any agreement or contract material to the Company and its Subsidiaries, taken as a whole, including any Significant Contract; or purchase any real property or make or agree to make any new capital expenditure or expenditures which in the aggregate are in excess of $5 million;
(xvi) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction satisfaction, in the Ordinary Course ordinary course of Business business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements most recent financial statements (or the notes thereto) of the Company included in the Company SEC Documents or incurred in the Ordinary Course ordinary course of Business business consistent with past practice; or
(xvii) authorize, recommend, propose or relating announce an intention to matters expressly permitted by clauses (d) or (e)do any of the foregoing, or arising from the Transactionsenter into any contract, including payments agreement, commitment or arrangement to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Mecon Inc)
Conduct of Business by the Company Pending the Merger. Except Prior to the Effective Time and except as provided in Section 7.10 or the Transition Agreement, unless Parent shall otherwise expressly contemplated agree in writing after written notice provided by this Agreement the Company specifying in reasonable detail the basis for any action by the Company or as its Subsidiaries outside the scope of agreed upon activities set forth in the Disclosure Schedulethis Section 6.1 and at Parent's election, during the period a meeting with officials from the date of this Agreement Company or its Subsidiaries, as the case may be, to discuss the earlier to occur of basis for such action:
(i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business their respective businesses in the usual, regular and ordinary course andin the same manner as heretofore conducted, to the extent consistent therewithand shall, and shall cause its Subsidiaries to, use its reasonable best their diligent efforts to preserve intact its current their present business organizationorganizations, keep available the services of its current their present officers and employees and preserve its their relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject them to the provisions of Section 7.5 end that their goodwill and Article IX, ongoing businesses shall be unimpaired at the Effective Time. The Company shall notshall, and shall cause each of its Subsidiaries to (A) maintain insurance coverages and its books, accounts and records in the usual manner consistent with prior practices; (B) comply in all material respects with all laws, ordinances and regulations of Governmental Entities applicable to the Company and its Subsidiaries; (C) maintain and keep its properties and equipment in good repair, working order and condition, ordinary wear and tear excepted; and (D) perform in all material respects its obligations under all contracts and commitments to which it is a party or by which it is bound, in each case other than where the failure to so maintain, comply or perform, either individually or in the aggregate, would not to, without reasonably be expected to result in a Company Material Adverse Effect;
(ii) the prior written consent of Parent (which Company shall not be unreasonably withheld):
and shall not propose to (aA) (x) declare, set aside sell or pay pledge or agree to sell or pledge any dividends on, or make any other actual, constructive or deemed distributions capital stock owned by it in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017Subsidiaries, (yB) amend its Third Amended Articles of Incorporation or Regulations, (C) split, combine or reclassify any of its outstanding capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock of the Company, or declare, set aside or pay any dividend or other distribution payable in cash, stock or property (other than dividends declared, set aside or paid in a manner consistent with the Company's past practice), or (zD) purchasedirectly or indirectly redeem, redeem purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of Company capital stock of stock;
(iii) the Company or shall not, nor shall it permit any of its Subsidiaries to, (A) issue, deliver or sell or agree to issue, deliver or sell any other securities thereof additional shares of, or rights of any rights, warrants or options kind to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issueof, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stockstock of any class, any other voting securities or equity equivalent or any option, rights or warrants to acquire, or securities convertible into, shares of capital stock other than issuances of Company Common Stock pursuant to the exercise of Stock Options, (B) except as provided for in the Company's capital expenditure budget for the fiscal year ending September 30, 1999 (the "Capital Expenditure Budget"), acquire, lease or any rights, warrants dispose or options agree to acquire, lease or dispose of any such shares, voting securities capital assets in excess of $1,000,000 or convertible securities or equity equivalent (any other assets other than for in the issuance ordinary course of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness)business, (yC) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (incur additional indebtedness other than in the ordinary course of business for working capital purposes or as provided for in the Capital Expenditure Budget or encumber or grant a security interest in any acceleration occurring asset in connection with the Offer such indebtedness; or the Merger pursuant (D) enter into any binding contract, agreement, commitment or arrangement with respect to the terms any of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)foregoing;
(civ) amend the Company shall not, nor shall it permit any of its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereofSubsidiaries to, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity interest in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or thereof; provided, however, that if after notice provided by the Company to Parent, Parent fails to agree to acquire any assets that have such merger, consolidation or acquisition and this Agreement is later terminated, Parent and its respective Affiliates shall be precluded from undertaking such merger, consolidation or acquisition for a value in excess period of $100,000 individually or in excess three (3) years following the date of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companysuch termination;
(iiv) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are except as set forth in excess of requirements for customer orders;
(iii) is taken in the ordinary course Schedule 6.1 of the normalCompany Disclosure Schedule, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that isCompany shall not, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose ofnor shall it permit, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthSubsidiaries to, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) as required to comply with applicable law and except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assetsprovided in Section 7.4 hereof, (iA) amend or otherwise modifyadopt, or enter into, terminate, expand the applicability of or amend any material contractbonus, agreement or commitmentprofit sharing, (ii) or enter into any joint venturecompensation, lease or management agreement severance, termination, stock option, pension, retirement, deferred compensation, employment or other material agreement of the Company or any of its Subsidiaries if, in each case, such contractBenefit Plan, agreement, commitmenttrust, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases fund or other similar instrumentsarrangement for the benefit or welfare of any director, officer or secured by any lien on any propertycurrent or former employee, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (xB) increase in any manner the compensation and employee benefits or fringe benefit of any director, officer or employee (except for normal increases in the ordinary course of business that are consistent with past practice and that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company and its directors, executive officers and other key employees, hire any new employees (other than Subsidiaries relative to replace an employee whose employment has terminatedthe level in effect prior to such amendment), or (C) pay any pension or retirement allowance benefit not required by law or provided under any existing plan or agreement to any such employeesarrangement, (yD) become a party togrant any awards under any bonus, amend incentive, performance or commit itself to any pension, retirement, profit-sharing or welfare benefit other compensation plan or agreement arrangement or employmentCompany Benefit Plan (including, severance without limitation, the grant of stock options, stock appreciation rights, stock based or change stock related awards, performance units or restricted stock, or the removal of existing restrictions in control agreement any benefit plans or agreements or awards made thereunder) except in the ordinary course of business or in a manner consistent with past practice, (E) take any action to fund or for in any other way secure the benefit payment of compensation or benefits under any employeeemployee plan, agreement, contract or arrangement or Company Benefit Plan other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course ordinary course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Codebusiness consistent with past practice, 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Samples: Merger Agreement (Essef Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective Time, the business of the Company shallshall be conducted only in, and the Company shall cause each of its Subsidiaries tonot take any action except in, in all material respects carry on its business in the regular and ordinary course andof business, to the extent consistent therewith, with past practice. The Company shall use its commercially reasonable best efforts to preserve intact its current business organization, to keep available the services of its current officers and officers, employees and consultants, and to preserve its present relationships with customers, suppliers and others having other Persons with which it has significant business dealings with itrelations. Without limiting the generality By way of the foregoing, amplification and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXnot limitation, the Company shall not, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly, do or propose or agree to do any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):Alpha Micro:
(a) amend or otherwise change its articles of incorporation or bylaws or equivalent organizational documents;
(xb) issue, sell, pledge, dispose of, encumber, or, authorize the issuance, sale, pledge, disposition, grant or encumbrance of any shares of its capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest in the Company, except with respect to options already granted under the Company's Stock Option Plan, and provided hereunder that nothing herein shall preclude the Company from effecting on its books transfers by its shareholders other than Loboxxx, xxd further provided that Loboxxx xxxll be permitted to transfer up to 292,000 shares of the Company Common Stock held by Loboxxx xx John XxXxxx xxx certain other employees of the Company designated by Loboxxx;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock, property or make otherwise, with respect to any other actualof its capital stock;
(d) reclassify, constructive combine, split, subdivide or deemed distributions in respect ofredeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(be) acquire (x) issueincluding, deliverwithout limitation, sell, pledge, dispose of for cash or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoby merger, consolidation, or acquisition of stock or assets) any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring interest in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association partnership or other business organization or division thereof or otherwise acquire any assets, or agree to acquire make any assets that have a value in excess investment either by purchase of $100,000 individually stock or in excess securities, contributions of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1capital or property transfer, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in natureor, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of business, consistent with past practice, purchase any property or assets, (ii) incur any indebtedness for borrowed money (other than to Loboxxx, xxovided that the normal, day-to-day operations amount owed Loboxxx xx of the CompanyEffective Date, whether pursuant to outstanding debentures, the existing credit agreement or otherwise, shall not exceed Three Million Nine Hundred Ninety Two Thousand One Dollars ($3,992,001), other than as permitted by Section 6.10; and
issue any debt securities or assume, guarantee or otherwise as an accommodation become responsible for, the obligations of any Person or entity, or make any loans or advances, (iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease dispose of or otherwise dispose of, or agree to sell, lease or otherwise dispose of, encumber any of its assets that have a value in excess of $100,000 individually assets, tangible or in excess of $500,000 intangible, except in the aggregate during ordinary course of business consistent with past practice, or (v) enter into any calendar month, except sales of inventory or obsolete assets Contract other than in the Ordinary Course ordinary course of Businessbusiness, consistent with past practice;
(f) increase the compensation payable or to become payable to its officers or employees, or, except as permitted by clauses (d) and (e) above with respect presently bound to raw materialsdo, inventorygrant any severance or termination pay to, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement or other material agreement of the Company or any of its Subsidiaries ifdirectors, in each caseofficers or other employees, such contractor establish, adopt, enter into or amend or take any action to accelerate any rights or benefits which any collective bargaining, bonus, profit sharing, trust, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any directors, officers or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (employees except for hedging arrangements in the Ordinary Course of Businessas disclosed on Schedule 5.1(f);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action other than in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially in a manner consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases practice with respect to accounting policies or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000procedures;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material existing claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise) due persons or entities other than Loboxxx, xxher than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice of due and payable liabilities reflected or reserved against inin its financial statements, as appropriate, or contemplated by, liabilities incurred after the Company Financial Statements (or the notes thereto) or incurred date hereof in the Ordinary Course ordinary course of Business business and consistent with past practice, or relating to matters expressly pay, discharge or satisfy any existing claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) due persons or entities other than Loboxxx xxxer than as permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateSection 6.10;
(k) (xi) increase or decrease prices charged to its customers, except for previously announced price changes, or take any other action which might reasonably result in any manner material increase in the compensation and employee benefits loss of customers through non-renewal or termination of service contracts or other causes; or
(j) agree, in writing or otherwise, to take or authorize any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law the foregoing actions or any existing plan action which would make any representation or agreement to any such employees, (y) become a party to, amend warranty in Article III untrue or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;incorrect.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleSection 6.3, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent therewith, use its all reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers suppliers, licensors, lessors and others having business dealings with it. Without limiting it to the generality end that its goodwill and ongoing business shall be unimpaired at the Effective Time; provided, however, that the Company shall be permitted to terminate or modify the business and operations of the foregoingCompany's hotel/casino facility located in Kansas City, and except Missouri in the event that an order, judgment, injunction, award or decree of any Governmental Entity against the Company or its Subsidiaries is granted or issued which results in the suspension, termination or revocation of the gaming licenses for such hotel/casino facility. Except as otherwise expressly contemplated permitted by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Crescent:
(a) (xi) 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 otherwise make any payments to its stockholders in their capacity as such, such (other than dividends declared and paid on the regular quarterly dividend Company Preferred Stock or the Redeemable Preferred Stock in the ordinary course of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March business and customary with past practice, 2017and dividends and other distributions by direct or indirect wholly owned Subsidiaries), (yii) other than in the case of any direct or indirect wholly owned Subsidiary, split, combine or reclassify any of its capital stock 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 (ziii) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (x) except as set forth in Section 5.17, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for (i) the issuance of shares of Company Common Stock (and associated Rights) upon the exercise of Options and for pledges of the employee stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger options pursuant to the Company Plans outstanding on the date of this Agreement in accordance with their current terms and (ii) the issuance of Company Common Stock upon the applicable equity incentive plan conversion of shares of Company Preferred Stock or agreement governing the applicable Company Stock Option)Redeemable Preferred Stock;
(c) amend its Certificate articles or certificate of Incorporation incorporation or Byby-laws or other comparable organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereofset forth in Section 5.23, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire (i) by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire (ii) any assets that have a value in excess of $100,000 are, individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1material to the Company and its Subsidiaries taken as a whole, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if other than transactions that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does business consistent with past practice and not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated material to the person making the decision or taking the action.Company and its Subsidiaries taken as a whole;
(e) except as set forth in a disclosure letter making reference to the extent required by contractual commitments existing on the date hereofthis section, sell, lease lease, license, mortgage, grant an interest in or easement in, or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease lease, license, mortgage, grant an interest in or easement in, or otherwise encumber or subject to any Lien or otherwise dispose of, any of its assets assets, other than transactions that have a value in excess of $100,000 individually or in excess of $500,000 are in the aggregate during any calendar month, except sales ordinary course of inventory or obsolete assets in business consistent with past practice and not material to the Ordinary Course of BusinessCompany and its Subsidiaries taken as whole;
(f) except as permitted by clauses (d) and (e) above with respect incur any indebtedness for borrowed money, guarantee any such indebtedness, issue or sell any debt securities or warrants or other rights to raw materialsacquire any debt securities, inventoryguarantee any debt securities or make any loans, supplies and obsolete assets, (i) amend advances or otherwise modifycapital contributions to, or terminateother investments in, any material contractother person, agreement or commitment, (ii) or enter into any joint venturearrangement having the economic effect of any of the foregoing, lease other than (i) indebtedness incurred in the ordinary course of business consistent with past practice and (ii) indebtedness, loans, advances, capital contributions and investments between the Company and any of its wholly owned Subsidiaries or management between any of such wholly owned Subsidiaries;
(g) except as set forth in Section 5.23, alter (through merger, liquidation, reorganization, restructuring or in any other fashion) the corporate structure or ownership of the Company or any Subsidiary;
(h) except as provided in Sections 5.8 and 5.18, enter into or adopt any new, or amend any existing severance plan, agreement or arrangement or enter into any new compensation or other material agreement welfare arrangement or plan, or amend any existing Company Plan or employment or consulting agreement, other than as required by law, except that the Company or its Subsidiaries may enter into (a) employment agreements if such agreements (i) are no longer than one year in duration (ii) provide for an annual base salary of less than $150,000, and (iii) provide, in the aggregate, for annual base salaries of less than $1,000,000, and (b) consulting agreements in the ordinary course of business that are terminable on no more than 90 days' notice without penalty;
(i) except (1) as permitted under Section 4.1(h), or (2) to the extent required by written employment agreements existing on the date of this Agreement, increase the compensation payable or to become payable to its officers or employees, except for (i) increases in the ordinary course of business consistent with past practice in salaries or wages of non-officer employees of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected and (ii) except to involve the receipt or payment by extent required under the Company or terms of any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)applicable incentive plan;
(gj) grant or award any stock options, restricted stock, performance shares, stock appreciation rights or other equity-based incentive awards;
(xk) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action, other than reasonable and usual actions in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur any additional indebtedness with respect to accounting policies or procedures (including for this purpose any indebtedness evidenced other than actions required to be taken by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transactiongenerally accepted accounting principles);
(l) except as set forth in a single transaction disclosure letter making reference to this section, make or a group agree to make any new capital expenditure or expenditures which, individually, is in excess of related transactions $1,000,000 or engage in any other financing arrangementswhich, in the aggregate, having a value are in excess of $100,00010,000,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(jm) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction satisfaction, in the Ordinary Course ordinary course of Business business (i) consistent with past practice, of liabilities reflected or reserved against in, or contemplated by, (a) the Company Financial Statements most recent consolidated financial statements (or the notes thereto) of the Company included in the Company SEC Documents or (b) the condensed consolidated balance sheets of the Company and its Subsidiaries as set forth in a disclosure letter making reference to this section, or (ii) incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practice;
(kn) settle or compromise any material federal, state, local or foreign tax liability; or
(xo) increase in any manner the compensation and employee benefits of authorize, recommend, propose or announce an intention to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated)the foregoing, or pay enter into any pension contract, agreement, commitment or retirement allowance not required by law or arrangement to do any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) Except as otherwise expressly contemplated permitted by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects :
(i) carry on its business in the regular and ordinary course and, of its business consistent with past practice and take no action which would reasonably be expected to adversely affect its ability to consummate the extent consistent therewith, transactions contemplated by this Agreement;
(ii) use its commercially reasonable best efforts to preserve intact its current business organizationorganizations and goodwill, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. ; and
(iii) comply in all material respects with all laws and regulations applicable to it or any of its properties, assets or business.
(b) Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by between the date of this Agreement or as set forth in and the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXEffective Time, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(ai) (xA) other than the Special Dividend and any dividends paid by wholly-owned Subsidiaries, 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 otherwise make any payments to its stockholders in their capacity as such, (B) other than in the regular quarterly dividend case of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March any Subsidiary, 2017, (y) split, combine or reclassify any of its capital stock 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 (zC) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (xii) issue, reissue, deliver, sell, pledge, grant, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Stock Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent any other ownership interest (other than for the issuance of shares upon the exercise of Options including stock appreciation rights, phantom stock and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtednessstock-based performance units), (y) except as contemplated by this Agreement, amend, waive or otherwise modify in the terms ordinary course of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection business consistent with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)past practice;
(ciii) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the CompanyOrganizational Documents;
(div) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or any equity interest in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets;
(v) sell, lease, pledge or otherwise dispose of or encumber, or agree to sell, lease, pledge or otherwise dispose of or encumber, any of its assets that have with a fair market value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1aggregate, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to other than sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, inventory that are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; andbusiness consistent with past practice;
(ivvi) does not require authorization by the Company’s board of directors (incur any indebtedness for borrowed money, guarantee any such indebtedness or committee of the board of directors) and does not require make any loans, advances or capital contributions to, or other capital contributions or investments in, any other separate Person, other than (A) in the ordinary course of business consistent with past practices or special authorization of any nature (that isB) indebtedness, is in accordance with loans, advances, capital contributions and investments between the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, Company and any of its assets that have a value wholly-owned Subsidiaries or between any of such wholly-owned Subsidiaries, in excess of $100,000 individually or in excess of $500,000 each case in the aggregate during any calendar month, except sales ordinary course of inventory or obsolete assets in the Ordinary Course of Businessbusiness consistent with past practices;
(fvii) except as permitted by clauses alter (dthrough merger, liquidation, reorganization, restructuring or in any other fashion) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend the corporate structure or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement ownership of the Company or any of its Subsidiaries ifor adopt a plan of complete or partial liquidation, in each casedissolution, such contractmerger, agreementconsolidation, commitmentrestructuring, venture, lease recapitalization or management agreement involves or could reasonably be expected to involve the receipt or payment by other reorganization of the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in (other than the aggregate (except for hedging arrangements in the Ordinary Course of BusinessMerger);
(gviii) (x) except as contemplated by Section 7.11 hereof reclassify, combine, split, subdivide or for borrowings incurred in the Ordinary Course redeem, purchase or otherwise acquire, directly or indirectly, any shares of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters capital stock of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries or any securities convertible into or exercisable for any such shares of no more its capital stock or securities, other than pursuant to Options outstanding as of the date hereof in accordance with their respective terms;
(ix) make any change to accounting methods, policies or procedures used by it as of the date hereof (other than actions required to be taken by GAAP);
(x) except as set forth in Section 5.1(b)(x) of the Disclosure Schedule, enter into, amend or terminate any agreement or contract (A) having a term in excess of 12 months and that is not terminable by the Company or a Subsidiary without penalty or premium by notice of 60 days or less or (B) outside the ordinary course of business consistent with past practice, which involves or is expected to involve payments of $100,000 individually and or $500,000 per month in the aggregateaggregate or more during the term thereof (provided that in the case of agreements or contracts with any customer, the margins anticipated from any such agreement or contract shall be consistent in all material respects with historical margins); enter into, amend or terminate any other agreement or contract material to the Company and its Subsidiaries, taken as a whole; or purchase any real property, or make or agree to make any new capital expenditure or expenditures (other than the purchase of real property or capital expenditures set forth on Section 5.1(b)(x) of the Disclosure Schedule) that are in excess of $100,000 individually or $500,000 in the aggregate and not modify or amend, or terminate a waiver or release or assign any material rights or claims with respect to, any material agreement or arrangement to which it is a party;
(jxi) Except as set forth on Section 5.1(b)(xi) of the Disclosure Schedule (A) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations in the Ordinary Course ordinary course of Business of liabilities reflected business consistent with past practice or reserved against inin accordance with their terms, (B) cancel any material indebtedness (individually or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate) or waive any claims or rights of substantial value or (C) waive the benefits of, or agree to modify in any manner, any confidentiality, standstill or similar agreement to which it is a party;
(kxii) promptly deliver to Parent true and correct copies of any report, statement or schedule filed with the SEC subsequent to the date of this Agreement;
(xxiii) increase in not modify, extend the term or forgive or cancel any manner outstanding loans owed to the compensation and employee benefits of Company or any of its Subsidiaries by any current or former directors, executive officers and other key officers, employees, hire consultants or independent contractors of such entities;
(xiv) except as set forth in Section 5.(b)(xiv) of the Disclosure Schedule, not make any new employees (other than to replace an employee whose employment has terminated)loans, advances or capital contributions to, or pay investments in any pension or retirement allowance other Person;
(xv) not required by law or any existing plan or agreement to any such employees, (y) become a party toalter, amend or commit itself revoke any tax election or method of accounting with respect to taxes or settle or compromise any material tax claim;
(xvi) maintain insurance on its tangible assets and its business in such amounts and against such risks and losses as are currently in effect;
(xvii) except as required in accordance with GAAP, not revalue any of its assets, including, without limitation, writing down the value of its inventory or writing off notes or accounts receivables other than in the ordinary course of business consistent with past practice;
(xviii) pursuant to or within the meaning of any bankruptcy law, not (A) commence a voluntary case, (B) consent to the entry of an order for relief against it in an involuntary case, (C) consent to the appointment of a custodian of it or for all or substantially all of its property or (D) make a general assignment for the benefit of its creditors;
(xix) other than in the ordinary course of business, not amend, modify, assign, terminate, reject, cancel or fail to exercise a right of renewal or extension, with respect to any pensionmaterial Contract relating to Intellectual Property;
(xx) not settle any legal proceedings, retirementwhether now pending or hereafter made or brought, profit-sharing except to the extent of any accruals therefor in the Company's Financial Statements;
(xxi) except as set forth on Section 5.1(b)(xxi) of the Disclosure Schedule, not apply any of its assets or welfare benefit plan properties to the direct or agreement indirect payment, discharge, satisfaction or employmentreduction of any amount payable directly or indirectly, severance or change in control agreement with to or for the benefit of any employee, Related Party or enter into any transaction with a Related Party (except for payment of salary and other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers customary expense reimbursements made in the Ordinary Course ordinary course of Business and (B) amendments business to employment agreements required to cause such agreements to not be subject to Section 409A Related Parties who are employees, directors or officers 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); provided, however, that the Company and its Subsidiaries. "Related Party" means any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) affiliate, associate, shareholder, officer, director, employee or agent of the Disclosure ScheduleCompany or any Subsidiary or any member of his or her family by blood or marriage;
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or Agreement, as set forth in the Disclosure ScheduleCompany Letter or as expressly permitted by clauses (a) through (t) of this Section 4.1, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimePre-Closing Period, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course in substantially the same manner as currently conducted and, to the extent consistent therewith, use its all commercially reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers suppliers, distributors, licensors, licensees and others having business dealings with it. Without In addition to and without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure SchedulesCompany Letter, and subject to during the provisions of Section 7.5 and Article IX, Pre-Closing Period the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (Buyer, which shall will not be unreasonably withheld):withheld or delayed, do or agree to do any of the following:
(a) (xi) 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 otherwise make any payments to its stockholders shareholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yii) split, combine or reclassify any of its capital stock 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 stock, or (ziii) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for other than the withholding redemption or repurchase at cost of shares repurchased from employees upon termination of Common Stock employment or in connection with Taxes payable in respect of the exercise of Optionsa Company Stock Option);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Company Stock Option Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for the issuance of shares Shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring outstanding on the date of this Agreement in connection accordance with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)their current terms;
(c) amend its Certificate of Incorporation the Company Charter or By-laws or other any organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership documents of any Subsidiary of the Company’s Subsidiaries;
(d) except as required by contractual commitments existing on the date hereof, directly or indirectly acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the any assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, limited partnership, association or other business organization or entity or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken not in the ordinary course of the normalbusiness, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.except as allowed under Section 5.3;
(e) except to alter through merger, liquidation, reorganization, restructuring or any other fashion the extent corporate structure of any Subsidiary of the Company (other than any wholly-owned Subsidiary or foreign Subsidiary that would be wholly owned but for a nominal number of director or similar shares being owned by a foreign national as required by contractual commitments existing on the date hereof, law of the jurisdiction of such foreign Subsidiary’s organization);
(f) sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets, except other than sales of inventory or obsolete other assets and other commercial transactions made in the Ordinary Course ordinary course of Business;
(f) except as permitted by clauses (d) and (e) above business consistent with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)past practice;
(g) incur any Indebtedness, guarantee any such Indebtedness or make any loans, advances or capital contributions to, or other investments in, any other Person (x) except as contemplated by Section 7.11 hereof or for borrowings incurred other than any Indebtedness entered into in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur practice or pursuant to the terms of any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000Company Benefit Plan);
(h) except as may be required as adopt a result plan of a change in law complete or in U.S. GAAPpartial liquidation, change dissolution, consolidation, restructuring, recapitalization or other reorganization, or otherwise permit its corporate existence, or any of the accounting principles rights or practices used by it materially affecting franchises or any license, permit or authorization under which the reported consolidated assetsbusiness operates to be suspended, liabilities lapsed or results of operations of the Company and its Subsidiariesrevoked;
(i) except as provided in Section 4.1(i) of the Company Letter or as otherwise provided in this Agreement, (i) hire additional employees (except for hirings in the Ordinary Course ordinary course of Businessbusiness consistent with past practice of the Company) (ii) increase the compensation payable or to become payable to its directors, officers or key employees (except for increases in the ordinary course of business consistent with past practice of the Company for executive officers or key employees who are not officers of the Company or as was required under employment agreements in effect as of the date of the Company Balance Sheet Date), (iii) grant any severance or termination pay to, or enter into any employment or severance agreement with, any director or officer of the Company, or (iv) except as provided in (i), (ii) or (iii) of this Section 4.1(i) or except as may be required or appropriate to comply with Applicable Law, amend any Company Benefit Plan;
(j) make any change to accounting policies or procedures (other than actions required to be taken by GAAP);
(k) commence any litigation or proceeding with respect to any material Tax liability or settle or compromise any material pending Tax liability or threatened suit, action commence any other material litigation or claim, proceedings (other than settlements for the routine collection of amounts owed) or compromises requiring payments settle or compromise any other material claims or litigation (other than in circumstances where (i) the costs of settlement are fully covered by insurance, existing loss reserves, or a combination of both, and (ii) the Company or any terms of its Subsidiaries of no more than $100,000 individually settlement are limited to cash payment and $500,000 per month in the aggregatecustomary releases);
(jl) except for sales of inventory and other commercial transactions in the ordinary course of business and the hiring of employees in the ordinary course of business as permitted in Section 4.1(i), enter into, renew, terminate or amend any Material Contract in any material respect;
(m) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction satisfaction, in the Ordinary Course ordinary course of Business business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements most recent financial statements (or the notes thereto) of the Company included in the Financial Statements or incurred in the Ordinary Course ordinary course of Business business consistent with past practice;
(n) create or relating to matters expressly form any Subsidiary or make any other investment in another Person (other than short term investments for the purpose of cash management or as otherwise permitted by clauses in Section 4.1(g));
(do) except as set forth in Section 4.1(o) of the Company Letter, make or (e), authorize any capital expenditure or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no expenditures more than $100,000 individually and $500,000 per month in the aggregateaggregate in excess of amounts set forth in the Company’s capital budget as of the date hereof;
(kp) (xi) increase in enter into any manner the compensation and employee benefits of license, distribution, marketing or sales agreements; (ii) enter into any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement commitment to any such employees, (y) become a party to, amend or commit itself person to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and develop software, (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A incorporate any software into any of the CodeCompany’s or its Subsidiaries’ products other than pursuant to valid license agreements executed in the ordinary course of business with royalty rates and license terms consistent with past practice, oror (C) enter into any license, if subject distributorship, or sales agreement that by its terms would purport to Section 409A relate to any of the Codeproducts of Buyer or its affiliates; (iii) sell, transfer or otherwise dispose of any Intellectual Property other than sales of its products and other non-exclusive licenses that are in the ordinary course of business and consistent with past practices, or (iv) grant “most favored nation” pricing to any Person, to not result in the application extent that any of the additional Tax thereunder (providedforegoing are not consistent with past business practice, that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in with respect of calendar year 2016 to the Persons agreements described in clause (ii) (C) of this Section 4.1(p), in no event may any such agreement be an exclusive arrangement;
(q) allow any insurance policy relating to the Company’s and in its Subsidiaries’ business to be amended or terminated without replacing such policy with a policy providing at least substantially equal coverage, insuring comparable risks and issued by an insurance company financially comparable to the amounts set forth prior insurance company;
(r) except as provided in Section 6.1(k5.5, as provided in Section 4.1(r) of the Disclosure ScheduleCompany Letter or otherwise pursuant to this Agreement, enter into or amend any contract, agreement, commitment or arrangement with any Affiliated Person;
(s) enter into, modify, amend or terminate any agreement, or waive, release or assign any material rights or claims thereunder, which if so entered into, modified, amended, terminated, waived, released, or assigned would reasonably be expected to have a Material Adverse Effect; or
(t) enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this the Agreement or as set forth in the Disclosure ScheduleSpin-Off Agreement, during the period from after the date of this Agreement hereof and prior to the Closing Date or earlier to occur of (i) the date termination of the termination of this Agreement or (ii) the Effective TimeAgreement, unless DDI shall otherwise agree in writing, the Company shall, and shall cause each its Subsidiaries, to:
(a) Prior to the Closing Date, Acquisition shall not engage in any activity other than activity in anticipation of its Subsidiaries tothe Merger. At the Closing, following satisfaction of the conditions precedent set forth in all material respects carry on its business this Agreement, Acquisition shall execute the Certificate of Merger referred to in Section 2.1;
(b) conduct their respective businesses in the regular ordinary and ordinary usual course and, of business and consistent with past practice;
(c) not (i) amend or propose to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and amend their respective charters or bylaws except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure SchedulesProxy Statement, and subject as may be amended from time to the provisions of Section 7.5 and Article IXtime, the Company shall not(ii) split, and shall cause each of its Subsidiaries not tocombine or reclassify (whether by stock dividend or otherwise) their outstanding capital stock, without the prior written consent of Parent or (which shall not be unreasonably withheld):
(a) (xiii) declare, set aside or pay any dividends ondividend or distribution payable in cash, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, property or otherwise make any payments to its stockholders in their capacity as suchotherwise, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding payment of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of dividends or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated distributions by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or Bya wholly-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any owned Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereofissue, sell, lease pledge or otherwise dispose of, or agree to issue, sell, lease pledge or otherwise dispose of, any shares of its assets that have a value in excess Company Common Stock, or any options, warrants or rights of $100,000 individually any kind to acquire any shares of their capital stock of any class or in excess of $500,000 in the aggregate during any calendar monthdebt or equity securities convertible into or exchangeable for such capital stock, except sales that the Company may issue shares upon conversion of inventory or obsolete assets in convertible securities and exercise of options and warrants outstanding on the Ordinary Course of Businessdate hereof and listed on SCHEDULE 5.2;
(f) except as permitted by clauses (d) and (e) above not (i) incur or become contingently liable with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employeeborrowed money, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers borrowings in the Ordinary Course ordinary course of Business and business or (B) amendments borrowings to employment agreements required refinance existing indebtedness, (ii) redeem, purchase, acquire or offer to cause such agreements purchase or acquire any shares of its capital stock or any options, warrants or rights 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); provided, however, that the Company and acquire any of its Subsidiaries may pay cash bonuses and capital stock or any security convertible into or exchangeable for its capital stock, (iii) make any acquisition of any assets or businesses other cash incentive compensation in respect of calendar year 2016 to the Persons and than expenditures for fixed or capital assets in the amounts set forth ordinary course of business and as described on SCHEDULE 6.2(e) attached hereto, (iv) sell, pledge, dispose of or encumber any assets or businesses other than sales in Section 6.1(kthe ordinary course of business or (v) enter into any contract, agreement, commitment or arrangement with respect to any of the Disclosure Scheduleforegoing;
(f) use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them and not engage in any action, directly or indirectly, with the intent to adversely impact the transactions contemplated by the Agreement or the Spin-Off Agreement;
(g) confer on a regular and frequent basis with one or more representatives of DDI to report operational matters of materiality and the general status of ongoing operations;
(h) not enter into or amend any employment, severance, special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees, except in the ordinary course and consistent with past practice;
(i) not adopt, enter into or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, health care, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any employee or retiree, except as required to comply with changes in applicable law;
(j) maintain with financially responsible insurance companies insurance on its tangible assets and its businesses in such amounts and against such risks and losses as are consistent with past practice; and
(k) take all such reasonable action as may be required to maintain its directors' and officers' liability insurance coverage.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization and Merger (General Credit Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleSchedule and except as contemplated by the Company’s annual or capital budget (including the right to substitute projects of substantially similar characteristics), during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement Agreement, (ii) the date directors designated by Parent or Sub constitute a majority of the Company Board, or (iiiii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in Section 6.1 of the Disclosure SchedulesSchedule, and except as contemplated by the Company’s annual or capital budget, and subject to the provisions of Section 7.5 and Article IX7.5, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):
(a) (x) declare, set aside or pay any dividends (whether in cash, assets, stock, property or other securities) on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders shareholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes taxes payable in respect of the exercise of Options or in connection with the “cashless” exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for for, the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtednessOptions), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring which occurs in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock OptionMerger);
(c) amend its Certificate Articles of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any material Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereofhereof and except for purchases of inventory in the ordinary course of business consistent with past practice, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 1 million individually or in excess of and $500,000 3 million in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyaggregate;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent as required by contractual commitments existing on the date hereofhereof and except sales of obsolete assets or sales of inventory in the ordinary course of business substantially consistent with past practice, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 1 million individually or in excess of and $500,000 3 million in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessaggregate;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assetsin the ordinary course of business, (i) amend or otherwise modify, or terminate, any material contractMaterial Contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 1 million or more per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)year;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Samples: Merger Agreement (Asv Inc /Mn/)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in on Section 4.5 of the Company Disclosure Schedule, the Company covenants and agrees that, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Pre-Closing Period:
(a) the Company shall conduct its business and operations in the ordinary course consistent with past practices;
(xb) the Company shall use commercially reasonable efforts to maintain its relations and goodwill with all suppliers, customers, landlords, creditors, and other Persons having business relationships with the Company;
(c) the Company shall keep in full force all insurance policies identified in Section 2.13 of the Company Disclosure Schedule;
(d) the Company shall not declare, accrue, set aside or pay any dividends on, dividend or make any other actual, constructive or deemed distributions distribution in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchaseCapital Stock, and shall not repurchase, redeem or otherwise acquire reacquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares Capital Stock or other securities (except for that the withholding of shares of Company may repurchase Company Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger from former employees pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Optionexisting restricted stock purchase agreements);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except as set forth in this Agreement, the Company shall not amend or permit the adoption of any amendment to the extent required Company’s certificate of incorporation or bylaws or amend any term of the Capital Stock, or effect or permit the Company to become a party to any acquisition transaction, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(f) the Company shall not form any subsidiary or acquire any equity interest or other interest in any other Entity;
(g) the Company shall not make or incur any material capital expenditure that is not currently approved in a written budget (a copy of which has been provided to Parent);
(h) the Company shall not (i) enter into, or permit any material assets owned or used by contractual commitments existing on it to become bound by, any Contract that is or would constitute a Company Significant Contract, or (ii) amend or prematurely terminate, or waive any material right or remedy under, any such Contract;
(i) the date hereof, sellCompany shall not (i) acquire, lease or license any right or other asset from any other Person, (ii) sell or otherwise dispose of, or agree to sell, lease or otherwise dispose oflicense, any of its assets that have a value in excess of $100,000 individually right or in excess of $500,000 in the aggregate during other asset to any calendar monthother Person, or (iii) waive or relinquish any right, except sales for assets acquired, leased, licensed or disposed of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the pursuant to Contracts that are not Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregateSignificant Contracts;
(j) pay, discharge or satisfy the Company shall not (i) lend money to any material claims, liabilities or obligations, other than Person (except that the payment, discharge or satisfaction Company may make routine travel advances to employees in the Ordinary Course ordinary course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (ebusiness), or arising from the Transactions, including payments to advisors, and except (ii) incur or guarantee any indebtedness for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateborrowed money;
(k) the Company shall not change any of its methods of accounting or accounting practices in any material respect, except as required by law;
(xl) the Company shall not make any Tax election;
(m) the Company shall not commence or settle any Legal Proceeding;
(n) the Company shall not enter into any employment contract;
(o) the Company shall not grant to any executive officer or other employee any increase in annual compensation;
(p) the Company shall not take any manner the compensation and employee benefits action or omit to take any action, which action or omission would result in a breach or inaccuracy of any of its directors, executive officers the representations and other key employees, hire warranties of the Company in any new employees material respect; and
(other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance q) the Company shall not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend agree or commit itself to take any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Code, or, if subject to Section 409A of the Code, to not result actions described in the application of the additional Tax thereunder clauses “(provided, that any such amendment does not materially expand the benefits to be received thereunderd); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;” through “(p)” above.
Appears in 1 contract
Samples: Merger Agreement (Entremed Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from (a) The Company covenants and agrees that between the date of this Agreement to and the earlier to occur of (i) the date of Effective Time and the termination of this Agreement in accordance with its terms, unless Parent shall otherwise agree in writing, which agreement shall not be unreasonably withheld, delayed or conditioned (ii) and except as set forth in Section 6.1 of the Effective TimeCompany Disclosure Letter or as otherwise expressly permitted or required by this Agreement), the Company shall, and shall cause each of its the Company Subsidiaries to, (i) maintain its existence in all material respects carry on good standing under applicable Law, (ii) subject to the restrictions and exceptions set forth in Section 6.1(b) or elsewhere in this Agreement, conduct its business and operations only in the regular ordinary and ordinary usual course and, to the extent of business and in a manner consistent therewith, with prior practice and (iii) use its commercially reasonable best efforts to (A) preserve intact its current assets, properties, Contracts or other legally binding understandings and business organizationorganizations, (B) keep available the services of its current officers and key employees and consultants and (C) preserve its the current relationships of the Company and the Company Subsidiaries with customers, suppliers suppliers, distributors, lessors, licensors, licensees, creditors, employees, contractors and others having other Persons with which the Company or any of the Company Subsidiaries has business dealings with it. relations.
(b) Without limiting the generality foregoing, the Company covenants and agrees that between the date of this Agreement and the earlier of the foregoing, Effective Time and except as otherwise expressly contemplated by the termination of this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXaccordance with its terms, the Company shall not, and shall cause each of its the Company Subsidiaries not to, without to (except as expressly set forth on the applicable subsection of Section 6.1(b) of the Company Disclosure Letter or with the prior written consent approval of Parent (Parent, which approval shall not be unreasonably withheld, conditioned or delayed):
(ai) (xA) declare, set aside aside, establish a record date for, make or pay any dividends onor other distributions (whether in cash, stock or make any other actual, constructive or deemed distributions property) in respect of, of any of its capital stockstock or other Equity Interests or (B) enter into any agreement with respect to the voting of its capital stock or other Equity Interests;
(ii) adjust, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or that of any Company Subsidiary or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or that of any Company Subsidiary;
(ziii) purchaserepurchase, redeem or otherwise acquire acquire, directly or indirectly, any shares of its or any Company Subsidiaries’ capital stock of the Company or any of its Subsidiaries Company Common Stock Rights or Subsidiary Stock Rights (except pursuant to restricted stock award agreements outstanding on the date hereof) or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)Equity Interests;
(b) (xiv) issue, deliver, deliver or sell, pledge, dispose of pledge or otherwise encumber any shares of its or any Company Subsidiaries’ capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent Company Common Stock Rights (other than for the issuance of shares upon of Company Common Stock pursuant to Company Common Stock Options outstanding on the exercise date of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(cv) waive any rights under or amend the Rights Plan, except as expressly required to have this Agreement and the transactions contemplated hereby exempted from the Rights Plan (including the Rights Plan Actions);
(vi) amend its the Company Certificate of Incorporation or By-laws or other Company Bylaws or, to the extent doing so would be adverse to Parent, any equivalent organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary documents of the CompanyCompany Subsidiaries;
(dvii) except as required by contractual commitments existing on incur, create, assume or otherwise become liable for any Indebtedness or assume, guaranty, endorse or otherwise become liable or responsible for the date hereof, acquire or agree to acquireIndebtedness of any other Person (other than a Company Subsidiary), except (A) in connection with refinancings of existing Indebtedness, (B) for purchases of raw materials, supplies, accounts payable and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken vendor advances incurred in the ordinary course of business, (C) Indebtedness among the normalCompany and the Company Subsidiaries or among the Company Subsidiaries, day-to-day operations and (D) Indebtedness under existing credit facilities;
(viii) make any loans, advances or capital contributions to or investments in any other Person (other than any Company Subsidiary) other than (A) loans made in the ordinary course of business and (ii) in connection with transactions permitted pursuant to Section 6.1(b)(xv);
(ix) merge or consolidate with any other entity or adopt a plan of complete or partial liquidation, dissolution, recapitalization or other reorganization or otherwise permit its corporate existence to be suspended, lapsed or revoked;
(x) alter, amend or create any obligations with respect to compensation, severance, benefits, change of control payments or any other payments to present or former employees, directors or Affiliates of the Company; and, or any other service providers of the Company, other than alterations or amendments (A) made to non officers and non directors in the ordinary course of business consistent with past practice, (B) as expressly required or permitted by Section 2.7 of this Agreement or (C) required under applicable Laws or the express terms of any Company Benefit Plan;
(ivxi) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease license, mortgage, transfer, lease, or otherwise dispose ofof any Equity Interests in any Person, or agree to sellbusiness or material properties or assets (including any Equity Interests of any Company Subsidiaries), lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except other than sales of inventory or obsolete assets in the Ordinary Course ordinary course of Businessbusiness, consistent with past practice;
(fxii) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend pledge or otherwise modifysubject to any Encumbrance (including by merger, consolidation, or terminate, sale of stock or assets) any material contractproperty or asset (including any Company Intellectual Property Rights);
(xiii) license (other than pursuant to a Form Customer License), agreement transfer, assign, abandon, or commitment, (ii) allow to lapse or enter into expire any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment Intellectual Property owned by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)Subsidiaries;
(gxiv) (x) except as contemplated by Section 7.11 hereof knowingly or for borrowings incurred intentionally disclose any trade secrets to any Person, other than in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(hxv) except as may be required as a result acquire any material business, assets or securities other than inventory and raw materials in the ordinary course of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesbusiness consistent with past practice;
(ixvi) except in the Ordinary Course of Businessfile any material Tax Return materially inconsistent with past practice, make any material Tax election, settle or compromise any material pending Tax claim or threatened suitassessment by any Governmental Entity, action file any amended Tax Return, change an annual tax accounting period, adopt or claimchange any tax accounting method, fail to pay any material Tax when it becomes due and payable, enter into any closing agreement, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any income or other than settlements material Tax claim or compromises requiring payments by assessment relating to the Company or any of its Subsidiaries of no more than $100,000 Subsidiaries;
(xvii) incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith that individually and $500,000 per month or in the aggregate, are in excess of $250,000;
(jxviii) pay, discharge discharge, settle, cancel, incur or satisfy any material claims, liabilities or obligationsLiabilities, other than the payment, discharge or satisfaction of Liabilities in the Ordinary Course ordinary course of Business of liabilities reflected or reserved against inbusiness consistent with past practice, or contemplated byas required by any applicable Law, as accrued for in the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e)Statements, or arising from as required by the Transactionsterms of any Company Material Contract, including payments to advisors, and except for payments, discharges and satisfaction as in effect on the date of no more than $100,000 individually and $500,000 per month in the aggregatethis Agreement;
(kxix) enter into, modify, amend or terminate (A) any Contract which if so entered into, modified, amended or terminated could reasonably be expected to (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employeeshave a Company Material Adverse Effect, (y) become impair in any material respect the ability of the Company, Parent or Merger Sub to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of the transactions contemplated by this Agreement or (B) except in the ordinary course of business consistent with past practice, any Company Material Contract;
(xx) maintain insurance at less than levels in effect as of the date hereof or otherwise in a party tomanner inconsistent with past practice in any material respect;
(xxi) except as required by GAAP, amend make any material changes in accounting methods, principles or commit itself practices;
(xxii) enter into any transaction that could give rise to a disclosure obligation as a “reportable transaction” under Section 6011 of the Code and the regulations thereunder;
(xxiii) 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 under the Exchange Act that would be required to be disclosed under such Item 404;
(xxiv) compromise, release, waive or settle any Action directly relating to or affecting the Company’s Intellectual Property having a value or in an amount in excess of $150,000, or that is brought by any current, former or purported holder of any capital stock or debt securities of the Company or any Company Subsidiary relating to the transactions contemplated by this Agreement;
(xxv) implement any employee layoffs that could give rise to notice obligations under WARN;
(xxvi) grant any material refunds, credits, rebates or other allowances to any pensionend user, retirementcustomer, profit-sharing reseller or welfare benefit plan or agreement or employmentdistributor, severance or change in control agreement with or for the benefit of any employeeeach case, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course ordinary course of Business and business consistent with past practice;
(Bxxvii) amendments to employment agreements required to cause such agreements to not be subject to Section 409A communicate in writing with employees of the CodeCompany or any Company Subsidiary regarding the compensation, benefits or other treatment that they will receive in connection with the Merger, unless any such communications are consistent with prior directives or documentation provided to the Company by Parent (in which case, the Company shall provide Parent with prior notice of and the opportunity to review and comment upon any such communications); or
(xxviii) knowingly commit, if subject authorize, agree to Section 409A take or enter into any letter of intent or similar agreement or arrangement with respect to any of the Codeactions described in this Section 6.1(b).
(c) Nothing contained in this Agreement is intended to give Parent, directly or indirectly, the right to not result in control or direct the application operations of the additional Tax thereunder (providedCompany or any Company Subsidiary prior to the Effective Time. Prior to the Effective Time, that any such amendment does not materially expand the benefits to be received thereunder); provided, however, that each of Parent and the Company shall exercise, consistent with the terms and any conditions of this Agreement, complete control and supervision over its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;its respective Subsidiaries’ respective operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as Unless Amazxx.xxx xxxll otherwise expressly contemplated by this Agreement or as set forth agree in writing, the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date business of the termination of this Agreement or (ii) Company shall be conducted in and only in, and the Effective TimeCompany shall not take any action except in, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to of business and in a manner consistent with past practice and in accordance with applicable law; and the extent consistent therewith, Company shall use its reasonable best efforts to preserve intact its current the business organizationorganization of the Company, to keep available the services of its the current officers and officers, employees and consultants of the Company and to preserve its the current relationships with of the Company with, and the goodwill of, customers, suppliers and others having other Persons with which the Company has significant business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, between the date of this -54- 62 Agreement and shall cause each the Effective Time, directly or indirectly do, or propose to do, any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):Amazxx.xxx:
(a) amend or otherwise change the Company's Certificate of Incorporation or Bylaws;
(xb) except for the issuance of shares of Company Capital Stock upon the exercise or conversion of currently outstanding Stock Purchase Rights, issue, sell, contract to issue or sell, pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge, disposition, grant or Encumbrance of (i) any assets of the Company, except in the ordinary course of business and in a manner consistent with past practice, (ii) any shares of capital stock of any class of the Company, or (iii) any options, warrants, convertible securities or other rights 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;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock or make any other actualsecurities, constructive property or deemed distributions in otherwise, with respect of, to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise make any payments to its stockholders in their capacity as suchacquire, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March directly or indirectly, 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(be) (xi) issueacquire (including, deliverwithout limitation, sellby merger, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoconsolidation, or any rights, warrants acquisition of stock or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (yassets) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess material amount of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, any obligations of inventoryany Person, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months andor make any loans or advances, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of business and consistent with past practice; (iii) enter into any contract or agreement other than in the normalordinary course of business, day-to-day operations of the Companyconsistent with past practice; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require authorize any other separate or special authorization of any nature (that is, single capital expenditure which is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually 20,000 or capital expenditures which are, in the aggregate, in excess of $500,000 50,000 for the Company taken as a whole; (v) enter into any agreement in which the aggregate during obligation of the Company exceeds $10,000 or which shall not terminate or be subject to termination for convenience within 30 days following execution; (vi) license any calendar monthTechnology or IP Rights; or (vii) enter into or amend any contract, except sales of inventory agreement, commitment or obsolete assets arrangement with respect to any matter set forth in the Ordinary Course of Businessthis subsection (e);
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsenter into or amend any employment, inventory, supplies and obsolete assets, (i) amend consulting or otherwise modifyagency agreement, or terminateincrease the compensation payable or to become payable to any of its officers, employees, agents or consultants, or grant any material contractseverance or termination pay to, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement any director, officer or other material agreement employee of the Company Company, or establish, adopt, enter into or amend any of its Subsidiaries ifcollective bargaining, in each casebonus, such contractprofit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance, Employee Benefit Plan or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any director, officer or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employee;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action, other than reasonable and usual actions in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness with respect to accounting methods, policies or procedures (including for this purpose any indebtedness evidenced by notesincluding, debentureswithout limitation, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement procedures with respect to the payment of accounts payable and obligations under letters collection of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000accounts receivable);
(h) except as may be required as a result of a change in law make any Tax election or in U.S. GAAP, change settle or compromise any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its SubsidiariesTax liability;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claimsclaim, liabilities liability or obligationsobligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent with past practice;
(j) take any action that would or is reasonably likely to result in any of liabilities reflected the representations or reserved against inwarranties of the Company set forth in this Agreement being untrue in any material respect, or contemplated by, in any covenant of the Company Financial Statements (or the notes thereto) or incurred set forth in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e)this Agreement being breached, or arising from in any of the Transactions, including payments conditions to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month the Merger specified in the aggregate;Article IV hereof not being satisfied; or
(k) (x) increase in any manner the compensation and employee benefits of agree to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Amazon Com Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of (i) the date of the termination of Effective Time and the date, if any, on which this Agreement or is terminated pursuant to Section 8.1, except (iia) the Effective Timeas may be required by Law, the Company shall, and shall cause each of its Subsidiaries to, (b) as may be agreed in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated writing by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which consent shall not be unreasonably withheld):, delayed or conditioned), (c) as may be expressly permitted pursuant to this Agreement, or (d) as set forth in Section 6.1 of the Company Disclosure Letter, (x) the business of the Company and its subsidiaries shall be conducted only in, and such entities shall not take any action except in, the ordinary course of business and in a manner consistent with past practice in all material respects; provided, however, that no action by the Company or its subsidiaries with respect to matters specifically addressed by any provision of this Section 6.1 shall be deemed a breach of this clause (x) unless such action would constitute a breach of such specific provision; and (y) the Company shall not and shall not permit its subsidiaries to:
(a) amend or otherwise change the Restated Certificate of Incorporation or the Bylaws of the Company (x) declare, set aside or pay any dividends on, such equivalent organizational or make any other actual, constructive or deemed distributions in respect of, governing documents of any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Optionssubsidiaries);
(b) (x) except for transactions among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries, or as otherwise contemplated in Section 6.1(e), issue, deliver, sell, pledge, dispose of dispose, encumber or otherwise encumber grant any shares of its or its subsidiaries’ capital stock, any other voting securities or equity equivalent or any securities convertible intooptions, or any rightswarrants, warrants or options to acquire, any such shares, voting securities or convertible securities or other rights of any kind to acquire any shares of its or its subsidiaries’ capital stock or other equity equivalent interests; provided, however that (other than for i) the issuance of Company may issue shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Restricted Stock, the exercise of any Company Option, or payment of any Company Restricted Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms Unit outstanding as of the applicable equity incentive plan date hereof or agreement governing as may be granted after the applicable date hereof under Section 6.1(e), and (ii) the Company Stock Option)may issue shares required by the employment agreements, offer letters set forth on Section 6.1(b) of the Company Disclosure Letter and Company Benefit Plans existing as of the date hereof;
(c) amend its Certificate of Incorporation declare, authorize, make or By-laws pay any dividend or other organizational documentsdistribution, payable in cash, stock, property or alter through mergerotherwise, liquidationwith respect to the Company’s or any of its subsidiaries’ capital stock, reorganization, restructuring other than dividends paid by any subsidiary of the Company to the Company or in any other fashion, the corporate structure or ownership of any Subsidiary wholly owned subsidiary of the Company;
(d) except as required by contractual commitments pursuant to existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating withwritten agreements, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins written agreements for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken newly hired employees entered into in the ordinary course of the normalbusiness, day-to-day operations Company Benefit Plans in effect as of the Company; and
(iv) does not require authorization by the Company’s board of directors (date hereof or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent as otherwise required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assetsLaw, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement increase the compensation or other material agreement benefits payable or to become payable to employees, directors or executive officers of the Company or any of its Subsidiaries ifsubsidiaries, except for increases in each casecash compensation in the ordinary course of business consistent with past practice for employees other than directors and officers, such contract(ii) grant any severance or termination pay to, agreementor enter into any severance agreement with, commitmentany employee, venture, lease director or management agreement involves or could reasonably be expected to involve the receipt or payment by executive officer of the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month subsidiaries, other than in the aggregate ordinary course of business consistent with past practice with respect to employees other than directors and officers, (iii) enter into any employment agreement (other than offer letters to new hires in the ordinary course of business) with any employee or executive officer of the Company (except for hedging arrangements extension of employment agreements existing on the date hereof, in the Ordinary Course ordinary course of Businessbusiness consistent with past practice), or (iv) establish, adopt, enter into or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries;
(e) grant, confer or award, except as may be required under the agreements set forth in Section 6.1(e) of the Company Disclosure Letter, any options, convertible securities, restricted stock, restricted stock units or other rights to acquire any of its or its subsidiaries’ capital stock or take any action not otherwise contemplated by this Agreement to cause to be exercisable any otherwise unexercisable option under any existing stock plan (except as otherwise provided by the terms of any unexercisable options or other equity awards outstanding on the date hereof);
(f) acquire (including by merger, consolidation, or acquisition of stock or assets), except in respect of any merger, consolidation, business combination among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries, any corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof, except with respect to acquisitions with collective purchase prices not exceeding $20,000,000 in the aggregate;
(g) incur any long-term Indebtedness for borrowed money or guarantee any such indebtedness for any person (xother than a Company subsidiary) except as contemplated by Section 7.11 hereof for Indebtedness (i) incurred under the Company’s existing credit facilities or incurred to replace, renew, extend, refinance or refund any existing indebtedness, (ii) for borrowings borrowed money incurred pursuant to agreements in effect prior to the execution of this Agreement, (iii) incurred under letters of credit in the Ordinary Course ordinary course of Business business, or (including drawdowns iv) as permitted by otherwise required in the Credit Agreement) and for hedging arrangement substantially ordinary course of business consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may modify or amend any Company Material Contract with a term longer than one (1) year which cannot be required as a result terminated without material penalty upon notice of a change ninety (90) days or less other than (i) in law the ordinary course of business or (ii) which would not have, individually or in U.S. GAAPthe aggregate, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the a Company and its SubsidiariesMaterial Adverse Effect;
(i) make any material change to its methods of accounting in effect at January 30, 2010, except (i) as required by GAAP (or any interpretation thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization), (ii) to permit the audit of the Company’s financial statements in compliance with GAAP, (iii) as required by a change in applicable Law or (iv) as disclosed in the Ordinary Course Company SEC Documents;
(j) reclassify, combine, split or subdivide any of Businessits capital stock;
(k) redeem, repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock, other than (i) the acquisition by the Company of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Options in order to pay the exercise price of the Company Option, (ii) the withholding of shares of Company Common Stock to satisfy withholding Tax obligations with respect to awards granted pursuant to the Company Plans, (iii) the acquisition by the Company in the ordinary course of business in connection with terminated employees of Company Options and Company Restricted Stock Units in connection with the forfeiture of such awards pursuant to the terms of the Company Plans and in any event at a price per share not in excess of the fair market value of such award or the Offer Price, and (iv) the acquisition by the trustee of the 401(k) Plan maintained by the Company of shares of Company Common Stock in order to satisfy participant elections under the 401(k) Plan maintained by the Company;
(l) loan or advance any money or other property to, or enter into any transaction with, any current or former director or officer of the Company (other than advancement of reimbursable expenses);
(m) (i) settle or compromise (A) any material pending or threatened suit, legal action or claimproceeding, in each case made or pending against the Company or any of its subsidiaries, other than settlements or compromises requiring that require payments by the Company or any of its Subsidiaries subsidiaries (net of no more than $100,000 individually and insurance proceeds) in an amount not to exceed $500,000 per month individually or $10,000,000 in the aggregate;
(j) pay, discharge or satisfy and that do not require any material claims, liabilities actions or obligations, other than impose any material restrictions on the payment, discharge business or satisfaction in the Ordinary Course operations of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business subsidiaries and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A any legal action or proceeding involving any holder or group of holders of the CodeCompany Common Stock other than in accordance with Section 6.18; or (ii) enter into any contract or agreement providing for aggregate obligations under such contract or agreement, 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); provided, however, that or payments by the Company and or any of its Subsidiaries may pay cash bonuses subsidiaries, in excess of $25,000,000 other than, with respect to clause (ii), purchases and other cash incentive compensation in respect sales of calendar year 2016 to the Persons and inventory in the amounts set forth in Section 6.1(kordinary course of business; or
(n) enter into any agreement to do any of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Merger Agreement (Gymboree Corp)
Conduct of Business by the Company Pending the Merger. Except ----------------------------------------------------- as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary and usual course of business and in a manner substantially consistent with past practice;
(xb) not (i) amend or propose to amend their respective articles of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock, or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions to the Company or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for any such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business or borrowings under the existing credit facilities of the Company or of any of its subsidiaries up to the existing borrowing limit on the date hereof, and (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed $______________, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares other than in connection with the exercise of capital stock outstanding Options pursuant to the terms of the Company Plans, (iii) make any acquisition of any assets or any businesses other than expenditures for current assets for fixed or capital assets in each case in the ordinary course of its Subsidiaries or any other securities thereof or any rightsbusiness, warrants or options to (iv) without Parent's consent, acquire any such shares or other securities gaming property, (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance (A) sales of shares upon the exercise of Options and for pledges businesses or assets disclosed in Section 5.01 of the stock Company Disclosure Schedule, (B) pledges or encumbrances pursuant to existing credit facilities or other permitted borrowings, (C) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the buyer of such real estate, assets or facilities) to non-affiliates of the Subsidiaries Company of less than $10,000 in each such case and $100,000 in the Companyaggregate, including foreign Subsidiaries, which are required (D) sales or dispositions of businesses or assets as may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplieslaw, and inventory in the Ordinary Course (E) sales or dispositions of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness, day-to-day operations or (vi) enter into any binding contract, agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the extent required services of their respective present officers and key employees, and use all reasonable efforts to preserve the goodwill and business relationships with customers and others having business relationships with them other than as expressly permitted by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any terms of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Agreement;
(f) not enter into, amend, modify or renew any employment, consulting, severance or similar agreement with, or grant any salary, wage or other increase in compensation or increase in any employee benefit to, any director or officer of the Company or of any of its subsidiaries, except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitmentfor changes that are required by applicable law, (ii) or enter into any joint venture, lease or management agreement or other material agreement to satisfy obligations existing as of the Company date hereof, or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month (iii) in the aggregate (except for hedging arrangements in the Ordinary Course ordinary course of Business)business consistent with past practice;
(g) (x) except not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any director, officer or employee of the Company or of any of its subsidiaries, except, in each such case, as contemplated may be required by Section 7.11 hereof applicable law or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practiceterms of contractual obligations existing as of the date hereof, incur including any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000collective bargaining agreement;
(h) not make expenditures in excess of expenditures permitted by the Company's last budget approved by the Board of Directors, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to make expenditures, except (i) expenditures which the Company or its subsidiaries are currently contractually committed to make, (ii) other expenditures not exceeding $100,000 in each such case and $300,000 in the aggregate, (iii) for emergency repairs and other expenditures necessary in light of circumstances not anticipated as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles date of this Agreement which are necessary to avoid significant disruption to the Company's business or practices used by it materially affecting operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), or (iv) for repairs and maintenance in the reported consolidated assets, liabilities or results ordinary course of operations of the Company and its Subsidiariesbusiness consistent with past practice;
(i) except in the Ordinary Course of Businessnot make, settle change or compromise revoke any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not Tax election unless required by law or make any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance settlement with any taxing authority regarding any material amount of Taxes or change in control agreement with which would reasonably be expected to materially increase the obligations of the Company or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers Surviving Corporation to pay Taxes in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;future.
Appears in 1 contract
Samples: Merger Agreement (Raceland Truck Plaza & Casino LLC)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in Section 5.1 of the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement Agreement, or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course consistent with past practice and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve intact its current business organizationorganization and management, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with itit and maintain appropriate relations and goodwill with Governmental Entities. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in Section 5.1 of the Disclosure SchedulesSchedule, and subject to the provisions of Section 7.5 and Article IX6.5, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which with respect to paragraph (p) of this Section 5.1 shall not be unreasonably withheld):
(a) (x) declare, set aside or pay any dividends (whether in cash, assets, stock, property or other securities) on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire acquire, directly or indirectly, any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)Options or the conversion of Restricted Stock Units) pursuant to their terms;
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intointo or exchangeable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or other equity equivalent (other than for the issuance of shares (and associated Preferred Stock Purchase Rights) upon the exercise of Options or the conversion of Restricted Stock Units or in connection with the Company’s Employee Stock Purchase Plan (subject to Section 6.6) and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtednessthe Credit Agreement referred to in Section 3.2), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Options or Restricted Stock Options Units (other than any acceleration occurring which occurs pursuant to the terms thereof as in effect on the date hereof in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock OptionMerger);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, consolidation, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any material Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course ordinary course of Businessbusiness consistent with past practice, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets (tangible or intangible) that have a value in excess of $100,000 5 million individually or in excess of $500,000 15 million in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyaggregate;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose ofof or mortgage, pledge or agree to sell, lease or otherwise dispose ofencumber, any of its property or assets (tangible or intangible and including Intellectual Property) that have a value in excess of $100,000 5 million individually or in excess of and $500,000 15 million in the aggregate during or that are otherwise material to the Company or any calendar monthof its Subsidiaries, or create any Lien (other than by operation of Law in the ordinary course of business) of any kind with respect to such property or assets, except sales of inventory or obsolete assets or inventory in the Ordinary Course ordinary course of Businessbusiness consistent with past practice;
(f) except in the ordinary course of business or as permitted required by clauses (d) and (e) above with respect to raw materialsa change after the date hereof in applicable Law, inventoryenter into, supplies and obsolete assets, (i) materially amend or otherwise modify, or unilaterally or prior to the expiration thereof agree to terminate, any material contractMaterial Contract, or any agreement or commitmentdescribed in the second sentence of Section 3.16 and any agreement that would be required to be listed in Section 3.21(a) of the Disclosure Schedule, (ii) or enter into any joint venture, lease agreement relating to the management of any material asset or management agreement property or other material agreement any of the businesses of the Company or any of its Subsidiaries if, in each case, (extensions of existing agreements shall not constitute material modifications or amendments of such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve agreements for purposes of the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Businessforegoing);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Samples: Merger Agreement (Efunds Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule(a) The Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of Effective Time, except (i) the date as required by applicable Law, (ii) as set forth in Section 5.01(b) of the termination Company Disclosure Letter, (iii) as expressly contemplated or permitted by any other provision of this Agreement or (iiiv) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which consent shall not be unreasonably withheld):, conditioned, or delayed), the businesses of the Company and its Subsidiaries shall be conducted only in the ordinary course of business and the Company and each of its Subsidiaries shall use their reasonable best efforts to comply in all material respects with applicable Law.
(ab) By way of amplification and not limitation, except (xi) declareas set forth in Section 5.01(b) of the Company Disclosure Letter, set aside (ii) as required by applicable Law, (iii) as expressly contemplated or permitted by any other provision of this Agreement or (iv) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), the Company:
(i) shall not, and shall not permit any of its Subsidiaries that is not wholly owned to, authorize or pay any dividends on, on or make any distribution with respect to its issued and outstanding shares (whether in cash, assets, stock or other actualsecurities of the Company or its Subsidiaries), constructive except dividends and distributions paid by Subsidiaries of the Company to the Company or deemed distributions in respect of, to any of its capital stockwholly owned Subsidiaries;
(ii) shall not, or otherwise make and shall not permit any payments to of its stockholders in their capacity as suchSubsidiaries to, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock equity interests or any securities or rights convertible or exercisable into any of its equity interests or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock equity interests, except for any such transaction by a wholly-owned Subsidiary of the Company which remains a wholly-owned Subsidiary after consummation of such transaction;
(iii) shall not, and shall not permit any of its Subsidiaries to, make any change in financial accounting policies or procedures, except as required by GAAP (or other applicable accounting regulations), SEC rule or policy or applicable Law;
(iv) shall not, and shall not permit any of its Subsidiaries to, make, change or revoke any material Tax election, change any material aspect of its method of accounting (or any other Tax position) for Tax purposes, file any amended Tax Return, surrender any claim for a refund of material amounts of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment (other than pursuant to an extension of time to file a Tax Return obtained in the ordinary course of business), except as result of a change in GAAP or Tax Law;
(v) shall not, and shall not permit any of its Significant Subsidiaries to (A) adopt any amendments to its memorandum and articles of association or similar applicable charter documents, (B) adopt a plan or agreement of complete or partial liquidation, winding up or dissolution of the Company or any of its Significant Subsidiaries or commence any proceeding for the voluntary liquidation, winding up or bankruptcy of the Company or any of its Significant Subsidiaries; (C) adopt or implement a shareholder rights plan; or (zD) except as required by applicable Law, convene any annual, regular, extraordinary, special or other meeting (or any adjournment or postponement thereof) of the shareholders of the Company other than the Shareholders’ Meeting, and shall not, and shall not permit any of its Subsidiaries to, merge or consolidate the Company or any of its Subsidiaries with any person other than another Subsidiary of the Company;
(vi) shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, charge, dispose of or encumber, or authorize the issuance, sale, pledge, charge, disposition or encumbrance of, any shares of its share capital or other ownership interest in the Company or any of its Subsidiaries or any securities convertible into or exchangeable for any such shares or ownership interest, or any rights, warrants or options to acquire or with respect to any such shares, ownership interest or convertible or exchangeable securities, other than (A) issuances or transfers of Shares in respect of any exercise of Company Options outstanding on the date hereof and settlement of any award under the Share Incentive Plan (in accordance with its terms) outstanding on the date hereof, (B) the acquisition of Shares from a holder of a Company Option or outstanding on the date hereof any other award under the Share Incentive Plan outstanding on the date hereof, (C) any pledges, charges or encumbrances in connection with the financing of any Company Aircraft in the ordinary course of business;
(vii) shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, (A) purchase, redeem or otherwise acquire any shares of its share capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance acquisition of shares upon Shares from a holder of a Company Option or Company RSU to the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as extent contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants applicable employment Contract or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthPlan; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from after the date of this Agreement hereof and prior to the Closing Date or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, unless PalEx shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct its businesses in the ordinary and usual course and consistent with past practice;
(xb) not (i) amend or propose to amend its charter or by-laws, (ii) split, combine or reclassify its outstanding capital stock or (iii) declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise, except for the payment of dividends onor distributions described in SCHEDULE 6.1;
(c) not, except for shares issued to the Ridge Pallets, Inc. Profit Sharing Plan in connection with the transaction described in Section 7.13 hereof, issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, its capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock.
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the ordinary course of business, (B) borrowings to refinance existing indebtedness on terms comparable with or better than those at the date hereof, or (C) borrowings to fund distributions to Stockholders of the accumulated adjustment account, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance of any other securities in respect of, in lieu of or in substitution exchangeable for shares of its capital stock stock, (iii) take or (z) purchase, redeem fail to take any action which action or otherwise acquire any shares of capital stock of failure would cause the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities the Stockholders (except to the extent of non-stock consideration, if any, received in the Merger) to recognize gain or loss for the withholding of shares of Common Stock in connection with Taxes payable in respect federal income tax purposes as a result of the exercise consummation of Options);
the Merger, (biv) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normalbusiness or (v) enter into any contract, day-to-day operations agreement, commitment or arrangement with respect to any of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.foregoing;
(e) except use all reasonable efforts to preserve intact its business organizations and goodwill, keep available the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any services of its assets that have a value present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with it and not engage in excess of $100,000 individually any action, directly or in excess of $500,000 in indirectly, with the aggregate during any calendar month, except sales of inventory or obsolete assets in intent to adversely impact the Ordinary Course of Businesstransactions contemplated by this Agreement;
(f) except as permitted by clauses (d) confer on a regular and (e) above frequent basis with respect one or more representatives of PalEx to raw materials, inventory, supplies report operational matters of materiality and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement the general status of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)ongoing operations;
(g) (x) not enter into or amend any employment, severance, special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees, except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) ordinary course and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) not adopt, enter into or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, health care, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any employee or retiree, except as may be required as a result of a change to comply with changes in applicable law or in U.S. GAAP, change any the ordinary course of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company business and its Subsidiaries;consistent with past practices; and
(i) except maintain with financially responsible insurance companies insurance on its tangible assets and its businesses in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually such amounts and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, such risks and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement losses as are consistent with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;past practice.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization and Merger (Palex Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from the date of this Agreement Prior to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and unless Celiant shall cause each of its Subsidiaries to, otherwise agree in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent writing (which shall not be unreasonably withheld):), or as otherwise expressly contemplated by this Agreement:
(a) the business of the Company shall be conducted only in the ordinary and usual course consistent with past practice, and the Company shall use its best efforts to preserve intact the present business organization, to keep available the services of its present officers and key employees, and preserve the goodwill of those having business relationships with it;
(xb) the Company shall not (i) amend its charter, bylaws or other organizational documents or (ii) declare, set aside or pay any dividends ondividend or other distribution payable in cash, stock or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than property;
(c) the regular quarterly dividend of Company shall not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yi) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its outstanding capital stock or (zii) purchaseexcept in connection with the Company Stock Option Plans, directly or indirectly redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereofCompany shall not take any action with respect to, acquire or make any material change in, its accounting policies or procedures;
(e) The Company shall not (i) authorize for issuance, issue or sell or agree to issue or sell any shares of, or rights or securities of any kind to acquire, or rights or securities convertible into any shares of, its capital stock (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), except for purchases of raw materials, supplies, and inventory pursuant to the Company Stock Option Plans; (ii) (A) acquire or purchase an equity interest in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any another corporation, partnershippartnership or other business organization in the power amplifier industry or (B) otherwise acquire any assets for use in the power amplifier industry in the case of this clause (B) outside the ordinary and usual course of business and consistent with past practice or (C) otherwise enter into any material contract, association commitment or transaction related to the power amplifier industry outside the ordinary and usual course of business consistent with past practice to effect any of the foregoing described in clause (A) or clause (B) above (collectively a "Power Amp Business Transaction"); or (iii) except for any Power Amp Business Transaction, acquire or purchase an equity interest in or a substantial portion of the assets of another corporation, partnership or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value outside the ordinary and usual course of business and consistent with past practice or otherwise enter into any material contract, commitment or transaction outside the ordinary and usual course of business consistent with past practice to effect any of the foregoing described in this clause, in each case as described in this clause (iii), (x) involving consideration in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope100,000,000, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself without providing prior written notice to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;Celiant.
Appears in 1 contract
Samples: Merger Agreement (Andrew Corp)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during During the period from the date of this Agreement to until the Closing or earlier to occur of (i) the date of the termination of this Agreement 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 (iiwhich consent shall not be unreasonably withheld, delayed or conditioned), (x) the Effective Time, the Company shall, shall and shall cause each of its Subsidiaries to, to conduct their respective businesses and operations in the ordinary course of business in all material respects carry on its business in the regular and ordinary course andconsistent with past practices, (y) subject to the extent consistent therewithlimitations, restrictions and prohibitions set forth in clauses (a) through (w) of this Section 6.01, the Company shall use its reasonable best efforts to preserve intact its current business organizationorganization and, its assets, keep available the services of its current officers and officers, employees and consultants and preserve its goodwill and its relationships with customers, suppliers reinsurers, agents, service providers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, (z) the Company shall not, not and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) (x) declare, set aside aside, make or pay any dividends onor other distributions (whether in cash, stock or make any other actual, constructive or deemed distributions property) in respect of, of any of its or its Subsidiaries’ capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than (i) any dividends or distributions by a Subsidiary of the regular Company to the Company or to any other Subsidiary of the Company or (ii) quarterly dividend cash dividends paid by the Company on the Company Common Stock not in excess of not greater than $.04 0.065 per Share payable to stockholders share, per quarter, with record and payment dates generally consistent with the timing of record on a and payment dates in the most recent comparable prior year fiscal quarter prior to the date no earlier than March of this Agreement;
(b) adjust, 2017, (y) split, combine combine, subdivide or reclassify any of its capital stock or that of its Subsidiaries or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for for, shares of its capital stock or that of its Subsidiaries;
(zc) purchaserepurchase, redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire, directly or indirectly, any shares of its capital stock or any Company Stock Rights;
(d) issue, deliver, offer, grant or sell any shares of its capital stock, Company Stock Rights or Subsidiary Stock Rights, other than the issuance of shares of Company Common Stock upon the vesting or exercise of Company Stock Options, Company Performance RSUs or Company Restricted Stock Rights outstanding as of the date hereof in accordance with the terms thereof;
(e) amend the Company Certificate of Incorporation or Company By-laws or equivalent organizational documents of the Company’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, amalgamate or consolidate with any Person, in each case, other than (i) any such action 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) in the ordinary course of business consistent with past practice with consideration not to exceed $2,000,000 individually or in the aggregate or (iii) investment portfolio transactions in the ordinary course of business and not in violation of the Investment Guidelines in effect as of the date hereof;
(g) sell, lease, license, allow to lapse, abandon, mortgage, encumber or otherwise dispose of, discontinue, abandon or fail to maintain any of its properties or assets (including capital stock of any Subsidiary of the Company) that are material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole, other than the sale or other disposition or any lease or license of assets (other than the capital stock of any Subsidiary of the Company) (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 or (ii) investment portfolio transactions in the ordinary course of business and not in violation of the Investment Guidelines as in effect as of the date of this Agreement;
(h) incur, create or assume any indebtedness for borrowed 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 any 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) guarantees by the Company of permitted Indebtedness of its wholly-owned Subsidiaries or guarantees by the wholly-owned Subsidiaries of the Company of permitted Indebtedness of the Company or (ii) investment portfolio transactions in the ordinary course of business and not in violation of the Investment Guidelines as in effect as of the date of this Agreement;
(i) make any loans, advance or capital contributions to, or investments in, any Person, other than (i) the Company or any of its wholly-owned Subsidiaries, or (ii) investment portfolio transactions in the ordinary course of business and not in violation of the Investment Guidelines as in effect as of the date of this Agreement;
(j) settle, commence or discharge any material Action made or pending against the Company or any of its Subsidiaries, or any of their respective directors or officers in their capacities as such, other than the settlement of Actions that would not reasonably be expected to prohibit or materially restrict the Company and its Subsidiaries from operating their business in substantially the same manner as operated on the date of this Agreement or require the waiver or release of any material rights or claims;
(k) cancel any material Indebtedness or waive any material benefits, claims or rights in connection therewith, in each case, other than in the ordinary course of business consistent with past practice;
(l) make any material change (i) in any accounting methods, principles or practices (including such methods, principles or practices relating to the estimation of Reserves), (ii) to the Investment Guidelines of the Company Insurance Subsidiaries as in effect as of the date of this Agreement, or (iii) to any of the actuarial, underwriting, claims administration or reinsurance policies, practices or principles of any Company Insurance Subsidiary, in each case, except as required by GAAP or SAP;
(m) conduct any material revaluation of any asset, including any material writing-off of accounts receivable or reinsurance recoverables, other than as required by GAAP or SAP;
(n) except as required by a Benefit Plan as of the date hereof, grant any increases in the compensation or benefits of any of its directors, officers or employees;
(o) except as required by a Benefit Plan as of the date hereof, (i) make any grant of, or increase in, any severance or enter into any agreements or understandings concerning any type of compensation (whether present, deferred, or contingent) that is based on or otherwise relates to any acquisition, merger, consolidation, sale, or other disposition of all or substantially all of the assets of the Company payable to any director, officer or employee, (ii) accelerate the time of payment or vesting of, or the lapsing of any restrictions with respect to, or fund or otherwise secure the payment of, any compensation or material benefits under any Benefit Plan, or (iii) establish, adopt, enter into, amend or terminate any material Benefit Plan (or any plan, program, agreement, or arrangement that would constitute a material Benefit Plan if in effect on the date hereof);
(p) make, revoke or change any material Tax election, settle or compromise any material proceeding relating to Taxes, file any material amended Tax Return, fail to file any material Tax Return when due or surrender any right to claim a material Tax refund, offset or other material reduction in Tax liability;
(q) enter into or amend or modify in any material respect, terminate, cancel or extend any Material Contract or enter into any contract or agreement that if in effect as of the date hereof would be a Material Contract or Reinsurance Contract, other than in the ordinary course of business consistent with past practice;
(r) enter into or amend in any manner any contract, agreement or commitment with any former or present director or officer of the Company or any of its Subsidiaries or with any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding Affiliate of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles foregoing Persons or practices used by it materially affecting any other Person covered under Item 404(a) of Regulation S-K under the reported consolidated assetsSecurities Act, liabilities or results of operations of other than as would not be adverse to the Company and its Subsidiaries;
(s) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization with respect to the Company or any of its Subsidiaries;
(t) (i) enter into any new line of business or (ii) change in any material respect any material products or any material operating or enterprise risk management policies, in each case, except as required by Law or by policies imposed, or requests made, by a Governmental Authority;
(u) enter into any agreement or commitment with any Insurance Regulatory Authority other than in the Ordinary Course ordinary course of Business, settle or compromise business consistent with past practice;
(v) enter into (i) any material pending funding obligations of any kind, or threatened suitmaterial obligation to make any additional advances or investments (including any obligation relating to any currency or interest rate swap, action hedge or claimsimilar arrangement) in respect of, any of the Investment Assets or (ii) any material outstanding commitments, options, put agreements or other than settlements or compromises requiring payments by arrangements relating to the Investment Assets to which the Company or any of its Subsidiaries of no more may be subject upon or after the Closing, in each case, other than $100,000 as would not, individually and $500,000 per month or in the aggregate;, reasonably be expected to have a Company Material Adverse Effect; or
(jw) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating agree to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of take any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change the actions described in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to this 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;6.01.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or Agreement, as set forth described in the Company Disclosure ScheduleSchedule or with respect to the Database Business, during the period from the date of this Agreement to the earlier to occur of (i) through the date of the termination stockholders approval of this Agreement or (ii) the Effective TimeMerger, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business their respective businesses in, and not enter into any transaction other than in accordance with, the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its their current business organizationorganizations, keep available the services of its their current officers and key employees and preserve its their relationships with customers, suppliers and others having business dealings with itthem. Without limiting the generality of the foregoing, and and, except as otherwise expressly contemplated by this Agreement or as set forth described in the Company Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXSchedule, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent, which consent of Parent (which shall not be unreasonably withheld):, of Parent:
(a) (x) 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 otherwise make any payments to its stockholders of the Company in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share dividends payable to stockholders the Company declared by any of record on a date no earlier than March , 2017the Company's Subsidiaries, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (securities, except for pursuant to the withholding of shares of Common Stock in connection with Taxes payable in respect terms of the exercise of Options)Stock Option Plans;
(b) (x) except for the disposition of shares of XX0.Xxx in connection with the IQ2 Sale, issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intointo or exchangeable or exercisable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (equivalent, other than for than, in the case of the Company, the issuance of shares Shares during the period from the date of this Agreement through the Effective Time upon the exercise of Stock Options and for pledges outstanding or the issuance of Stock Options in the stock ordinary course of business consistent with past practice in accordance with their current terms or enter into any agreement or contract with respect to the Subsidiaries of the Company, including foreign Subsidiaries, which are required sale or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms issuance of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)its securities;
(c) amend its Certificate of Incorporation charter or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companybylaws;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any material assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken other than in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance business consistent with the authority delegated to the person making the decision or taking the action.past practice);
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, of or agree to sell, lease or otherwise dispose of, any of its material assets that have a value in excess of $100,000 individually (other than (i) the Database Business or in excess of $500,000 (ii) in the aggregate during any calendar month, except sales ordinary course of inventory or obsolete assets in the Ordinary Course of Businessbusiness consistent with past practice);
(f) incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of others, except as permitted by clauses (d) and (e) above for borrowings or guarantees incurred in the ordinary course of business consistent with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modifypast practice for working capital purposes, or terminatemake any loans, advances or capital contributions to, or investments in, any material contractother person or entity, agreement other than to the Company or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement wholly owned Subsidiary of the Company or other than in the ordinary course of business;
(g) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by any Subsidiary of the Company or adopt any plan with respect to any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate foregoing (except for hedging arrangements in other than with respect to the Ordinary Course of Database Business);
(gh) other than as provided in the Database Agreements (x) as defined in Section 4.4 below), grant any severance or termination pay not currently required to be paid under existing severance plans or enter into or adopt, or amend any existing, severance plan, agreement or arrangement or, other than in the ordinary course of business, enter into or amend any employee benefit plan (including without limitation, the Stock Option Plans), or enter into or amend any employment or consulting agreement, except as contemplated required by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of as set forth on the Company and its SubsidiariesDisclosure Schedule;
(i) except enter into any contract or commitment with respect to capital expenditures with a value in the Ordinary Course of Businessexcess of, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments expenditures by the Company or any of and its Subsidiaries of no more than in excess of, $100,000 individually 150,000, individually, or enter into contracts or commitments with respect to capital expenditures with a value in excess of, or requiring expenditures by the Company and its Subsidiaries in excess of, $500,000 per month 200,000, in the aggregate;
(j) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement, increase the compensation or fringe benefits of any of its directors, officers or employees provided that, with respect to employees that are not executive officers or directors, the Company may increase compensation associated with promotions and regular reviews in the ordinary course of business consistent with past practice;
(k) agree to the settlement of any material claim or litigation;
(l) make or rescind any material tax election or settle or compromise any material tax liability;
(m) except as required by applicable law or GAAP, make any material change in its method of accounting;
(n) except as required under the Stock Option Plans or any existing agreements made available by the Company to Parent and Sub or by law, and as otherwise provided in this Agreement, the Database Agreements or any employment-related agreements in connection with the sale of the Database Business, accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred compensation, stock option, insurance or other compensation or benefits;
(o) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (A) of any such claims, liabilities or obligations in the Ordinary Course ordinary course of Business business and consistent with past practice or as provided in the Database Agreements or (B) of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the Company Financial Statements consolidated financial statements (or the notes thereto) or incurred contained in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateCompany SEC Documents;
(kp) (x) increase except as provided in the Database Agreements, enter into any manner agreement, understanding or commitment that restrains, limits or impedes the compensation and employee benefits of Company's or any of its directorsSubsidiaries' ability to compete with or conduct any business or line of business, executive officers and other key employeesincluding, hire any new employees (other than to replace an employee whose employment has terminated)but not limited to, or pay any pension or retirement allowance not required by law geographic limitations on the Company's or any existing plan or agreement to any such employeesof its Subsidiaries' activities;
(q) except as provided in the Database Agreements, (y) become a party tomodify, amend or commit itself terminate any material contract to any pension, retirement, profit-sharing which it is a party or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and waive any of its Subsidiaries may pay cash bonuses and other cash incentive compensation material rights or claims except in respect the ordinary course of calendar year 2016 business consistent with past practice;
(r) notwithstanding anything to the Persons and contrary contained herein, incur, assume or suffer to exist any material liability or obligation in connection with the IQ2 Sale which is not reflected in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;Database Agreements; or
Appears in 1 contract
Samples: Merger Agreement (Intelliquest Information Group Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from After the date of this Agreement hereof and prior to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeClosing Date, unless Parent shall otherwise agree in writing, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct its businesses in the ordinary and usual course of business and consistent with past practice;
(xb) not (i) amend or propose to amend its charters or bylaws, (ii) split, combine, reorganize, reclassify, recapitalize or take any similar action with respect to their outstanding capital stock or (iii) declare, set aside or pay any dividends ondividend or distribution payable in cash, stock, property or otherwise;
(c) not issue, sell, pledge or dispose of, or make any other actualagree to issue, constructive sell, pledge or deemed distributions in respect dispose of, any additional share of, or any options, warrants or rights of any kind to acquire any share of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock;
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money, (ii) redeem, purchase, acquire or offer to redeem, purchase or acquire any shares of its capital stockstock or any options, warrants or otherwise make any payments rights to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify acquire any of its capital stock or issue any security convertible into or authorize the issuance exchangeable for its capital stock, (iii) make any acquisition of any assets or businesses other securities than expenditures for fixed or capital assets in respect ofthe ordinary course of business not exceeding $10,000 in any instance or $50,000 in the aggregate, in lieu of or in substitution for shares of its capital stock or (ziv) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares assets or businesses other than sales in the ordinary course of business or (v) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact its capital stockbusiness organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them and not engage in any action, directly or indirectly, with the intent to adversely impact the transactions contemplated by this Agreement;
(f) not enter into or amend any employment, severance, special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees;
(g) not adopt, enter into or amend any bonus, profit sharing, compensation, stock option, pension, retirement, deferred compensation, health care, employment or other employee benefit plan, agreement, trust fund or arrangement for the benefit or welfare of any employee or retiree, except as required to comply with changes in applicable law;
(h) use commercially reasonable efforts to maintain with financially responsible insurance companies insurance on its tangible assets and its businesses in such amounts and against such risks and losses as are consistent with past practice;
(i) not make, change or revoke any material Tax election or make any material agreement or settlement regarding Taxes with any taxing authority;
(j) not make any change in the Company's financial Tax or accounting methods, practices or policies, or in any assumption underlying such a method, practice or policy;
(k) give prompt written notice to Parent of the commencement of any Environmental Claim, or non-routine inspection by any governmental authority with responsibility for enforcing or implementing any applicable Environmental Laws, and provide to Parent such information as Parent may reasonably request regarding such Environmental Claim, any other voting securities developments in connection therewith, and, as applicable, the Company's anticipated or equity equivalent actual response thereto;
(l) use its commercially reasonable efforts to cause the transfer of Environmental Permits (on the same terms and conditions), and any financial assurance required thereunder to Parent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for Merger Sub as may be necessary under applicable Environmental Laws in connection with the issuance of shares upon the exercise of Options and for pledges consummation of the stock of transactions under this Agreement to allow Parent or Merger Sub to conduct the Subsidiaries business of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)currently conducted;
(cm) amend not enter into or assume any contracts or agreements having a value or imposing an obligation upon the Company in excess of $10,000 annually and all contracts or agreements having a value to or imposing an obligation on the Company that have remaining obligations of $50,000 or more, regardless of the annual payment;
(n) maintain its Certificate books of Incorporation account and records in the usual, regular and ordinary manner consistent with past policies and practice;
(o) not compromise, settle, grant any waiver or By-laws release relating to or other organizational documents, otherwise adjust any litigation or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership claims of any Subsidiary of nature whatsoever pending against the Company;
(dp) except as required by contractual commitments existing on not take any action or omit to take any action, which action or omission would result in a breach of any of the date hereof, acquire representations and warranties set forth in this Agreement; and
(q) not make or agree commit to acquiremake any capital expenditures, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken capital expenditures in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does business not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, 50,000 in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in the Company Disclosure Schedule, during the period from after the date of this Agreement to hereof and until the Effective Time or earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeAgreement, the Company shall, and unless Parent shall cause each of its Subsidiaries to, otherwise agree in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent writing (which agreement shall not be unreasonably withheld):withheld or delayed), the Company and its subsidiaries shall:
(a) conduct their respective businesses in the ordinary course of business consistent with past practice;
(xb) not (i) amend or propose to amend their respective articles of incorporation, bylaws or other charter documents, (ii) split, combine, subdivide or reclassify any shares of their outstanding capital stock, (iii) declare, set aside or pay any dividends ondividend or distribution payable in cash, stock, property or otherwise, or make any other actual, constructive or deemed distributions distribution in respect of, of any shares of its or its subsidiaries’ capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than except for (x) the payment of the Company’s regular quarterly dividend of not greater than $.04 0.30 per Share payable to stockholders of record on a date no earlier than March share, 2017, and (y) splitthe payment of dividends or distributions to the Company or a wholly owned subsidiary of the Company by a direct or indirect wholly owned subsidiary of the Company, combine or reclassify any of its capital stock 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 (ziv) purchaserepurchase, redeem or otherwise acquire acquire, or modify or amend, any shares of the capital stock of the Company or any of its Subsidiaries subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;
(c) not issue, sell, pledge, grant or dispose of, or agree to issue, sell, pledge, grant or dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock, except that the Company may issue shares upon the exercise of Options outstanding on the date hereof;
(except d) not (i) incur or become contingently liable with respect to any indebtedness for the withholding of borrowed money, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of Common Stock its capital stock or any options, warrants or rights to acquire any of its capital stock or any security convertible into or exchangeable for its capital stock other than in connection with Taxes payable in respect of the exercise of Options);
outstanding Options pursuant to the terms thereof, (biii) make any acquisition of any capital stock, assets or businesses of any other Person other than expenditures for current assets in the ordinary course of business consistent with past practice and expenditures for fixed or capital assets in the ordinary course of business consistent with past practice, (xiv) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares assets or businesses that are material to the Company and its subsidiaries taken as a whole, except (A) sales, leases, rentals and licenses in the ordinary course of business consistent with past practice, (B) pursuant to Contracts that are in force at the date of this Agreement and are disclosed in the Company Disclosure Schedules hereto, (C) dispositions of obsolete or worthless assets or (D) transfers among the Company and its capital stocksubsidiaries, or (v) enter into any binding Contract with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them, other than as expressly permitted by the terms of this Agreement;
(f) not enter into, amend, modify or renew any employment, consulting, severance or similar agreements with, pay any bonus or grant any increase in salary, wage or other compensation or any increase in any employee benefit to, any other voting securities directors, officers or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges employees of the stock of the Subsidiaries of the CompanyCompany or its subsidiaries, including foreign Subsidiaries, which are required or except in each such case (i) as may be required under the existing terms of borrowings or indebtedness)by applicable law, (yii) except to satisfy obligations existing as contemplated by this Agreement, amend, waive or otherwise modify of the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger date hereof pursuant to the terms of Contracts that are in effect on the applicable equity incentive plan date hereof or agreement governing (iii) in the applicable Company Stock Option)ordinary course of business consistent with past practice;
(cg) not enter into, establish, adopt, amend its Certificate of Incorporation or By-laws modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other organizational documentsemployee benefit, incentive or alter through mergerwelfare plan, liquidationagreement, reorganizationprogram or arrangement, restructuring or in any other fashion, the corporate structure or ownership respect of any Subsidiary directors, officers or employees of the Company;
Company or its subsidiaries, except, in each such case (di) except as may be required by contractual commitments applicable law or pursuant to the terms of this Agreement, (ii) to satisfy obligations existing as of the date hereof pursuant to the terms of Contracts that are in effect on the date hereof, acquire or agree including pursuant to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating withany collective bargaining agreement, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; andbusiness consistent with past practice;
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(eh) except to the extent required by contractual commitments under existing employee and director benefit plans, agreements or arrangements as in effect on the date hereofhereof or as expressly provided by this Agreement, sellnot accelerate the payment, lease right to payment or otherwise dispose ofvesting of any bonus, or agree to sellseverance, lease or otherwise dispose ofprofit sharing, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthretirement, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materialsdeferred compensation, inventorystock option, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement insurance or other material agreement of the Company compensation or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesbenefits;
(i) not make capital expenditures or enter into any binding commitment or Contract to make capital expenditures, except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by (i) capital expenditures which the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month subsidiaries are currently committed to make, (ii) capital expenditures consistent with the estimated amounts disclosed in the aggregateCompany SEC Reports, (iii) capital expenditures for emergency repairs and other capital expenditures necessary in light of circumstances not anticipated as of the date of this Agreement which are necessary to avoid significant disruption to the Company’s business or operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), and (iv) repairs and maintenance in the ordinary course of business;
(j) not make, change or revoke any material Tax election unless required by law or make any agreement or settlement with any taxing authority regarding any material amount of Taxes or which would reasonably be expected to materially increase the obligations of the Company or the Surviving Corporation to pay Taxes in the future;
(k) not make any changes in financial or Tax accounting methods, principles or practices (or change an annual accounting period), except insofar as may be required by a change in generally accepted accounting principles or applicable law;
(l) not adopt a plan or agreement of complete or partial liquidation or dissolution;
(m) not pay, discharge or satisfy any material claims, material liabilities or obligationsmaterial obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (A) of any such material claims, material liabilities or material obligations in the Ordinary Course ordinary course of Business business consistent with past practice or (B) of material claims, material liabilities or material obligations reflected or reserved against in, or contemplated by, the Company Financial Statements consolidated financial statements (or the notes thereto) or incurred contained in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateCompany SEC Reports;
(kn) not agree to the settlement of any claim, litigation, investigation or other action that is material to the Company and its subsidiaries, taken as a whole;
(xo) increase in not enter into any manner agreement, understanding or commitment that restrains, limits or impedes the compensation and employee benefits ability of the Company or any of its directors, executive officers and other key employees, hire any new employees (other than subsidiaries to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement compete with or for conduct any business or line of business, including geographic limitations on the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A activities 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); provided, however, that the Company and or any of its Subsidiaries may pay cash bonuses and other cash incentive compensation subsidiaries;
(p) not materially modify or amend, or terminate any Material Contract, or waive, relinquish, release or terminate any material right or material claim, or enter into any contract or agreement that would have been a Material Contract if it had been in respect of calendar year 2016 to existence at the Persons and in the amounts set forth in Section 6.1(k) time of the Disclosure Schedule;execution of this Agreement; and
(q) not agree to take any of the foregoing actions.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from Between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective Time, except as expressly required by this Agreement (i) the Company shall, and shall cause each of its Subsidiaries to, conduct the businesses of the Company and its Subsidiaries in the Ordinary Course of Business and in compliance in all material respects carry on with all applicable Laws and (ii) the Company shall, and cause its business in the regular and ordinary course and, to the extent consistent therewithSubsidiaries to, use its their respective reasonable best efforts to preserve intact the business organization of the Company and its current business organizationSubsidiaries, to keep available the services of its the current officers and officers, employees and consultants of the Company and its Subsidiaries and preserve its relationships with customers, suppliers Material Customers and others having business dealings with itMaterial Suppliers. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by between the date of this Agreement or as set forth in and the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXEffective Time, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) issue or sell any stock or other securities of the Company or any Subsidiary or any options, warrants or rights to acquire any such stock or other securities (xexcept pursuant to the exercise or conversion of, Company Preferred Shares outstanding on the date hereof and set forth in Section 3.02(a) of the Disclosure Schedule), or repurchase or redeem any stock or other securities of the Company (except from former employees, directors or consultants in accordance with agreements in place on the date of this Agreement and providing for the repurchase of shares at their original issuance price in connection with any termination of employment with or services to the Company or any Subsidiary);
(b) split, combine or reclassify any shares of its capital stock; or declare, set aside or pay any dividends on, dividend or make other distribution in stock or any property other actual, constructive or deemed distributions than solely cash in respect of, any of its capital stock, or otherwise make declare, set aside or pay any payments cash dividend or distribution to its stockholders in their capacity as such, other than be paid after the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoEffective Time, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant paid prior to the terms of the applicable equity incentive plan Effective Time unless such payment or agreement governing the applicable Company Stock Option)distribution is fully reflected in Closing Cash;
(c) amend its Certificate create, incur or assume any indebtedness (including obligations in respect of Incorporation capital leases); assume, guarantee, endorse or By-laws otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other organizational documentsPerson; or make any loans, advances or capital contributions to, or alter through mergerinvestments in, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the CompanyPerson;
(d) except as required by contractual commitments existing on the date hereofenter into, acquire adopt, terminate or agree to acquire, amend any Plan or (except for purchases normal salary increases in the Ordinary Course of raw materialsBusiness for employees who are not Affiliates) increase in any manner the compensation or fringe benefits of, suppliesor materially modify the employment terms of, and inventory its directors, officers, consultants or employees, generally or individually, or pay o promise any bonus or other benefit to its directors, officers, consultants or employees (except for existing payment obligations listed in Section 3.14(d) of the Disclosure Schedule), grant or promise any equity compensation, or hire any new officers or (except in the Ordinary Course of Business) any new employees or consultants; amend or accelerate, except as required by merging the terms of applicable Law or consolidating withany Plan as currently in effect, the payment, right to payment, or by purchasing a substantial portion vesting of the assets of any compensation or equity in, benefits; or by take any action other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 than in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent Business to fund or in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate way secure the payment of compensation or special authorization of benefits under any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.Plan;
(e) except to the extent required by contractual commitments existing on the date hereofacquire, sell, lease lease, license or otherwise dispose ofof any assets or property (including any shares or other equity interests in or securities of any Subsidiary), or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except other than purchases and sales of inventory or obsolete assets to customers in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend mortgage or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or pledge any of its Subsidiaries if, in each case, property or assets or subject any such contract, agreement, commitment, venture, lease property or management agreement involves assets to any Lien (other than a Permitted Lien);
(g) discharge or could reasonably be expected to involve the receipt satisfy any Lien or payment by the Company pay any obligation or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements liability other than in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result amend its certificate of a change in law incorporation, by-laws or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesother organizational documents;
(i) except sell, assign, transfer, license or sublicense any Company Owned Intellectual Property, other than pursuant to licenses with customers entered into in the Ordinary Course of Business;
(j) change the nature or scope of its business being carried on as of the date of this Agreement or commence any new business not being ancillary or incidental to such business;
(k) change its accounting methods, principles or practices, except insofar as may be required by a generally applicable change in GAAP;
(l) make or change any Tax election, change an annual accounting period, file any material amended Tax Return, enter into any closing agreement, waive or extend any statute of limitation with respect to Taxes, settle or compromise any material pending Tax liability, claim or threatened suitassessment, surrender any right to claim a refund of Taxes or take any other similar action relating to the filing of any Tax Return or claimthe payment of any Tax;
(m) enter into, other than settlements amend, terminate, take or compromises requiring payments by the Company omit to take any action that would constitute a violation of or default under, or waive any rights under, applicable Law or any contract or agreement of its Subsidiaries a nature required to be listed in Section 3.06, Section 3.09 or Section 3.15 of no more than the Disclosure Schedule;
(n) make or commit to make any capital expenditure in excess of $100,000 individually and per item or $500,000 per month 250,000 in the aggregate;
(jo) pay, discharge institute or satisfy settle any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatelegal proceeding;
(kp) (x) increase in fail to take any manner action necessary to preserve the compensation and employee benefits validity of any of its directors, executive officers and other key employees, hire Company Owned Intellectual Property or Permit; or
(q) agree in writing or otherwise to take any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing actions.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except The Company covenants and agrees that, between the Execution Date and the Effective Time, except as otherwise expressly contemplated required or permitted by this Agreement or as set forth unless Parent shall otherwise agree in the Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Timewriting, the Company shallshall conduct the business of the Company, and the Company shall cause each of its Subsidiaries tonot take any action except in, in all material respects carry on its business in the regular and ordinary course and, to the extent of business and in a manner consistent therewith, with past practice. The Company shall use its reasonable best efforts to preserve intact its current the business organizationorganization and assets of the Company, and to operate according to plans and budgets provided to Parent, to keep available the services of its current officers and the present officers, employees and consultants of the Company, to maintain in effect Material Agreements and to preserve its the present relationships of the Company with advertisers, sponsors, customers, licensees, suppliers and others having other Persons with which the Company has business dealings with itrelations. Without limiting the generality By way of the foregoingamplification and not limitation, and except as otherwise expressly contemplated permitted by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXAgreement, the Company shall not, between the Execution Date and shall cause each the Effective Time, directly or indirectly do, or propose to do, any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) amend or otherwise change the Certificate of Incorporation or By-laws or equivalent organizational document of the Company, or alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of the Company;
(xb) issue, sell, transfer, pledge, dispose of or encumber, or authorize the issuance, sale, transfer, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest of the Company; or sell, transfer, pledge, dispose of or encumber, or authorize the sale, transfer, pledge, disposition or encumbrance of any assets of the Company (except for sales of assets in the ordinary course of business and in a manner consistent with past practice) or redeem, purchase or otherwise acquire, directly or indirectly, any of the capital stock of the Company;
(c) declare, set aside or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect of, of any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchaseamend the terms of, repurchase, redeem or otherwise acquire any shares of capital stock of the Company or acquire, any of its Subsidiaries securities or propose to do any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companyforegoing;
(d) except as required by contractual commitments existing on the date hereofsell, acquire transfer, lease, license, sublicense, mortgage, pledge, dispose of, encumber, grant or agree to acquire, except for purchases otherwise dispose of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating withany Intellectual Property Rights, or amend or modify in any material way any existing agreements with respect to any Intellectual Property Rights;
(e) acquire (by purchasing a substantial portion merger, consolidation, acquisition of the stock or assets of or equity in, or by any other manner, any business or otherwise) any corporation, limited liability company, partnership, association joint venture or other business organization or division thereof thereof; incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse or otherwise acquire as an accommodation become responsible for, the obligations of any Person, or agree to acquire make any assets that have a value in excess of $100,000 individually loans, advances or in excess of $500,000 in the aggregate during enter into any calendar month; For purposes of this Section 6.1financial commitments, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of business consistent with past practice and as otherwise permitted under any loan or credit agreement to which the normalCompany is a party; authorize any capital expenditures which are, day-to-day operations of in the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that isaggregate, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually 100,000, or enter into or amend in excess any material respect any contract, agreement, commitment or arrangement with respect to any of $500,000 the matters set forth in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Businessthis Section 5.1(e);
(f) hire or terminate any employee or consultant, except as permitted by clauses in the ordinary course of business consistent with past practice; increase the compensation (dincluding, without limitation, bonus) and (e) above payable or to become payable to its officers or employees, except for increases in salary or wages of employees of the Company who are not officers of the Company in the ordinary course of business consistent with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modifypast practices, or terminategrant any severance or termination pay or stock options to, any material contract, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with any director, lease or management agreement officer or other material agreement employee of the Company Company, or establish, adopt, enter into or amend any of its Subsidiaries ifcollective bargaining, in each casebonus, such contractprofit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any current or could reasonably be expected to involve the receipt former directors, officers or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employees;
(g) (x) except as contemplated by Section 7.11 hereof change, any accounting policies or for borrowings incurred in the Ordinary Course of Business procedures (including drawdowns as permitted procedures with respect to reserves, revenue recognition, payments of accounts payable and collection of accounts receivable) unless required by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases statutory accounting principles or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000GAAP;
(h) except as may be required as a result of a change in law create, incur, suffer to exist or in U.S. GAAP, change assume any Lien on any of their material assets other than Liens outstanding on the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesdate hereof;
(i) except other than in the Ordinary Course ordinary course of Business, settle or compromise business consistent with past practice,
(A) enter into any material pending agreement, (B) modify, amend or threatened suit, action transfer in any material respect or claim, other than settlements or compromises requiring payments by terminate any material agreement to which the Company is a party or waive, release or assign any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregatematerial rights or claims thereto or thereunder or (C) enter into or extend any lease with respect to real property with any third party;
(j) make any Tax election or settle or compromise any federal, state, local or foreign income tax liability or agree to an extension of a statute of limitations;
(k) settle any material Litigation or waive, assign or release any material rights or claims except, in the case of Litigation, any Litigation which settlement would not (A) impose either material restrictions on the conduct of the business of the Company, or (B) for any individual Litigation item settled, exceed $50,000 in cost or value to the Company. The Company shall not pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), except in the ordinary course of business consistent with past practice in an amount or value not exceeding $100,000 in any instance or series of related instances or $100,000 in the aggregate or in accordance with their terms as in effect as of the date hereof;
(l) engage in any transaction, or enter into any agreement, arrangement, or understanding with, directly or indirectly, any related party, other than those contemplated pursuant to the payment, discharge or satisfaction terms of this Agreement and those existing as of the date hereof which are listed in the Ordinary Course Section 5.1(l) of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateDisclosure Schedule;
(km) fail to renew or maintain in full force and effect all insurance policies, as the case may be, currently in effect or fail to pay any insurance premiums thereon; and
(xn) increase in any manner the compensation and employee benefits of authorize, recommend, propose or announce an intention to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated)the foregoing, or pay agree or enter into any pension agreement, contract commitment or retirement allowance not required by law or arrangement to do any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Samples: Master Agreement
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) and the Effective Time, the business of the Company shallshall be conducted only in, and the Company shall cause each not take any action except in, the ordinary course of its Subsidiaries tobusiness, consistent in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, with past practice. The Company shall use its reasonable best efforts to preserve intact its current business organizationorganizations, to keep available the services of its current officers and officers, employees and consultants, and to preserve its present relationships with customers, suppliers and others having other persons with which it has significant business dealings with itrelations. Without limiting the generality By way of the foregoing, illustration and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXnot limitation, the Company shall not, between the date of this Agreement and shall cause each the Effective Time, directly or indirectly, do or propose or agree to do any of its Subsidiaries not to, the following without the prior written consent of Parent (which shall not be unreasonably withheld):ASFS:
(a) amend or otherwise change its articles of incorporation or bylaws or equivalent organizational documents;
(xb) issue, sell, pledge, dispose of, encumber, or, authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of its capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest, of it or (ii) any of its assets, tangible or intangible, except in the ordinary course of business consistent in all material respects with past practice;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, payable in cash, stock, property or make otherwise, with respect to any other actualof its capital stock;
(d) reclassify, constructive combine, split, subdivide or deemed distributions in respect ofredeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(bi) acquire (x) issueincluding, deliverwithout limitation, sell, pledge, dispose of for cash or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intoby merger, consolidation, or acquisition of stock or assets) any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring interest in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association partnership or other business organization or division thereof or otherwise acquire any assets, or agree to acquire make any assets that have a value in excess investment either by purchase of $100,000 individually stock or in excess securities, contributions of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1capital or property transfer, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in natureor, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken except in the ordinary course of the normalbusiness, day-to-day operations consistent with past practice, purchase any property or assets of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate Person, (ii) incur any indebtedness for borrowed money or special authorization issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any nature (that isPerson, is in accordance with the authority delegated except endorsement of checks payable to the person making Company in the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose ofordinary course of business, or agree to sellmake any loans or advances, lease or otherwise dispose of, (iii) enter into any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 Contract other than in the aggregate during any calendar monthordinary course of business, except sales of inventory or obsolete assets in the Ordinary Course of Businessconsistent with past practice;
(f) increase the compensation payable or to become payable to its officers or employees, or, except as permitted by clauses (d) and (e) above with respect presently bound to raw materialsdo, inventorygrant any severance or termination pay to, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint ventureemployment or severance agreement with, lease or management agreement or other material agreement of the Company or any of its Subsidiaries ifdirectors, in each caseofficers or other employees, such contractor establish, adopt, enter into or amend or take any action to accelerate any rights or benefits which any collective bargaining, bonus, profit sharing, trust, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, commitmenttrust, venturefund, lease policy or management agreement involves arrangement for the benefit of any directors, officers or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)employees;
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred take any action other than in the Ordinary Course ordinary course of Business (including drawdowns as permitted by the Credit Agreement) business and for hedging arrangement substantially in a manner consistent in all material respects with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases practice with respect to accounting policies or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000procedures;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change make any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariescapital investments;
(i) except in make any distributions to the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claimShareholders, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually ordinary and $500,000 per month in the aggregatecustomary salaries and expense reimbursements;
(j) pay, discharge or satisfy any material existing claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business and consistent in all material respects with past practice of due and payable liabilities reflected or reserved against inin its financial statements, as appropriate, or contemplated by, liabilities incurred after the Company Financial Statements (or the notes thereto) or incurred date hereof in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, business and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;consistent with past practice; or
(k) (x) increase agree, in writing or otherwise, to take or authorize any of the foregoing actions or any action which would make any representation or warranty in Article III untrue or incorrect in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;material respect.
Appears in 1 contract
Samples: Merger Agreement (Americas Senior Financial Services Inc)
Conduct of Business by the Company Pending the Merger. Except (a) From and after the date hereof and prior to the Effective Time or the earlier termination of this Agreement, except (i) with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (ii) as otherwise required by applicable Law, (iii) as expressly contemplated by this Agreement or (iv) as otherwise set forth in Section 5.1 of the Company Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in all material respects in the regular Ordinary Course of Business and ordinary course and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve its business organization intact its current business organization, keep available the services of its current officers and employees and preserve its relationships maintain existing relations with key customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoingsuppliers, partners, and other third parties with whom the Company and its Subsidiaries have significant business relationships.
(b) From and after the date hereof and prior to the Effective Time or the earlier termination of this Agreement, except (i) with the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (ii) as otherwise required by applicable Law, (iii) as expressly contemplated by this Agreement or (iv) as otherwise set forth in Section 5.1 of the Company Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXSchedule, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) (xi) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stockstock or equity interests, except for (i) dividends or otherwise make any payments distributions by a wholly owned Subsidiary of the Company to its stockholders in their capacity as such, the Company or to another wholly owned Subsidiary of the Company and (ii) dividends payable with respect to the Company Preferred Shares;
(ii) other than in the regular quarterly dividend case of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March wholly owned Subsidiaries, 2017, (y) split, combine combine, subdivide, adjust, amend the terms of or reclassify any of its capital stock or issue equity interests;
(iii) issue, deliver, sell, pledge, grant, transfer or authorize the issuance of otherwise encumber any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchaseother equity securities or any option, redeem warrant or other right to acquire or receive any shares of its capital stock or other equity securities, or redeem, purchase or otherwise acquire any shares of its capital stock or other equity securities, other than (A) in connection with the exercise, vesting or settlement, as applicable, of Company Equity Awards outstanding as of the date of this Agreement, including with respect to the satisfaction of Tax withholding and, with respect to Company SAR Awards outstanding as of the date of this Agreement or granted in accordance with this Agreement, the payment of any exercise or xxxxx xxxxx, if applicable, (B) the issuance of shares of Common Stock in respect of a participant’s accumulated contributions under the Company ESPP in accordance with the Company ESPP at the conclusion of the Final Offering, (C) the issuance by the Company or any of its wholly owned Subsidiaries of any shares of capital stock or equity interests to the Company or any wholly owned Subsidiary of the Company, (D) the grant of any Liens to secure obligations of the Company or any of its Subsidiaries in respect of any indebtedness permitted under clause (viii) below or (E) the issuance of shares of Common Stock upon conversion of shares of Company Preferred Stock in accordance with its terms;
(iv) amend the certificate of incorporation or bylaws of the Company or amend other similar organizational documents of any of its Subsidiaries, except, in the case of its Subsidiaries, for amendments that would not be materially adverse to the Company or adversely impact the transactions contemplated hereby (including, for the avoidance of doubt, amendments in connection with transactions or dispositions involving such Subsidiaries that are otherwise permitted hereunder);
(v) other than (A) acquisitions of inventory, raw materials and other property in the Ordinary Course of Business, (B) pursuant to transactions that would be permissible under clause (vii) below, or (C) in transactions between the Company and its wholly-owned Subsidiaries or among wholly owned Subsidiaries of the Company, acquire (by merger, consolidation, purchase of stock or assets or otherwise) any entity, business or assets that constitute a business or division of any Person or make any investments in or loans or capital contributions to any other Person (other than the Company or any of its wholly owned Subsidiaries), in each case for an amount in excess of $2 million in the aggregate;
(vi) other than as contemplated by the capital budget of the Company set forth in Section 5.1(b)(vi) of the Company Disclosure Schedule, make any capital expenditures that exceed $3 million in the aggregate;
(vii) other than in the Ordinary Course of Business or in transactions among wholly owned Subsidiaries of the Company, sell, lease, license, allow the expiration or lapse of (with respect to Intellectual Property registration or applications other than at the end of their statutory term), encumber (other than Liens securing indebtedness permitted under clause (viii) below or Permitted Liens) or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise) any entity, business, rights or assets for a purchase price or, if no purchase price is received, with a value, in excess of $3 million in the aggregate or sell, assign, transfer, convey, lease or otherwise dispose of any Owned Real Property or mortgage, pledge or subject to any Lien (other than Permitted Liens) any Real Property;
(viii) except for draws under the Company’s existing revolving credit facility under the Credit Agreement, create, incur, assume or otherwise be liable with respect to, or modify the terms of, any indebtedness for borrowed money in an amount in excess of $2 million in the aggregate, excluding indebtedness solely among the Company and its wholly owned Subsidiaries or among its wholly owned Subsidiaries; provided, however, that any indebtedness incurred or modified in accordance with this Section 5.1(b)(viii) shall not reasonably be expected to adversely affect the ability of Parent or Merger Sub to consummate the Financing or contain any material prepayment premiums or penalties;
(ix) other than in the Ordinary Course of Business, renew or extend, materially amend or terminate, or waive any material right, remedy or default under, any Material Contract, or enter into or materially amend any Contract that, if existing on the date hereof, would be a Material Contract, except for (A) entering into any Contract solely to the extent effecting a capital expenditure acquisition, disposition, or other transaction otherwise permitted by this Section 5.1(b) or (B) any of the actions contemplated by the Agreement Related to IDP and OGX, dated as of October 21, 2020, by and between Inmarsat Global Limited and the Company (the “Inmarsat Agreement”), including entering into the Operational Services Agreement (as defined in the Inmarsat Agreement);
(x) merge, combine or consolidate the Company or any of its Subsidiaries with and into any other Person, other than (A) in the case of any wholly Subsidiary of the Company, to effect any acquisition permitted by clause (v) or any disposition permitted by clause (vii) and (B) transactions solely between the Company and any wholly owned Subsidiary of the Company or solely among wholly owned Subsidiaries of the Company;
(xi) adopt or enter into a plan of complete or partial liquidation, restructuring, capitalization, reorganization or dissolution (other than with respect to or among wholly owned Subsidiaries of the Company);
(xii) waive, settle or compromise any pending or threatened Action against the Company or any of its Subsidiaries, other than waivers, settlements or agreements (A) for an amount not in excess of $1 million in the aggregate (excluding amounts to be paid under existing insurance policies), and (B) that do not impose any material restrictions on the operations or businesses of the Company or its Subsidiaries, taken as a whole, or any equitable relief on, or the admission of wrongdoing by, the Company or any of its Subsidiaries;
(xiii) except as required by any Company Benefit Plan, (A) increase the compensation or severance benefits of any director, officer, individual independent contractor or employee of the Company or any of its Subsidiaries, except for increases in base salary and payments of cash incentive compensation to individuals who are not “executive officers” of the Company (as determined by the Company pursuant to Rule 3b-7 of the Exchange Act), in each case, in the Ordinary Course of Business, (B) adopt any material new employee benefit plan or arrangement or materially amend, modify or terminate any existing Company Benefit Plan, in each case, other than (1) as would not materially increase the cost to the Company or its Subsidiaries or (2) offer letters that are entered into in the Ordinary Course of Business with newly hired employees who are not “executive officers” (as defined above) and that do not provide for any severance benefits, (C) take any action to accelerate the vesting or payment, or the funding of any payment or benefit under, any Company Benefit Plan, (D) recognize any union or other labor organization as the representative of any of the employees of the Company or any of its Subsidiaries or enter into any collective bargaining agreements, (E) hire or terminate the employment or services of any “executive officer” of the Company (as defined above), other securities thereof than a termination for cause or due to permanent disability, (F) permit (1) the commencement of any new offering periods under the Company ESPP, (2) participants to increase deductions under the Company ESPP, or (3) new participants to begin participation in the Company ESPP, or (G) grant to any director, officer, independent contractor or employee of the Company or any rightsof its Subsidiaries any right to reimbursement, warrants indemnification or options payment for any Taxes, including any Taxes incurred under Section 409A or 4999 of the Code on any of the foregoing to acquire any such shares or other securities (except the extent that it creates a liability for the withholding Company or any of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)its Subsidiaries;
(bxiv) make any change in financial accounting methods, principles, policies or practices of the Company or any of its Subsidiaries, except insofar as may be required by GAAP (or any interpretation or enforcement thereof) or applicable Law;
(xv) (xA) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent make (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms filing of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory Tax Returns in the Ordinary Course of Business), by merging change or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by revoke any other manner, any business or any corporation, partnership, association entity classification election or other business organization material Tax election, (B) enter into any settlement or division thereof compromise of any material Tax liability, (C) file any amended material Tax Return, (D) adopt or otherwise acquire change any material method of Tax accounting or material annual Tax accounting period (except as may be required by GAAP), (E) enter into any closing agreement relating to any material Tax liability, (F) agree to acquire extend the statute of limitations in respect of any assets that have a value in excess material amount of $100,000 individually or in excess Taxes (other than pursuant to extensions of $500,000 time to file Tax Returns obtained in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if Business that action:do not require consent of a Tax authority), (G) surrender any right to claim a material Tax refund, or (H) initiate any material voluntary disclosure with or request any material ruling from a Tax authority;
(ixvi) is substantially consistent in natureguarantee any indebtedness of another Person (other than the Company or any of its wholly owned Subsidiaries), scope, and magnitude with enter into any “keep well” or other agreement to maintain any financial statement condition of another Person (other than the past practices Company or any of its wholly owned Subsidiaries) or enter into any arrangement having the economic effect of any of the foregoing;
(xvii) enter into any new line of business outside of the Company’s and its Subsidiaries’ existing businesses on the date of this Agreement;
(iixviii) with respect to sales announce, implement or effect any reduction in force, layoff or other program resulting in the termination of inventoryemployees, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for in each case, that would trigger the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer ordersWARN Act;
(iiixix) is taken in the ordinary course of the normalfail to renew or maintain material existing insurance policies or comparable replacement policies, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets than in the Ordinary Course of Business;
(fxx) except as permitted by clauses (dA) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, make any material contract, agreement change to any Privacy Policy that would affect the Company’s ability to collect or commitment, use Personal Data or (iiB) or enter into any joint venture, lease or management agreement or other material agreement materially alter the security of the Company or any of its Subsidiaries ifIT Assets, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction purposes of no more than $100,000 individually and $500,000 per month in the aggregatecomplying with applicable Law;
(kxxi) (x) increase in any manner the compensation and employee benefits of any of its directorsterminate, executive officers and other key employeesmaterially amend, hire any new employees (other than to replace an employee whose employment has terminated)materially modify, renew, extend or cancel, or pay grant any pension material waiver or retirement allowance not required by law or give any existing plan or agreement to material consent under, any such employeesReal Property Lease, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or except for the benefit of any employee, other than (A) the establishment extension or renewal of any existing Real Property Lease in accordance with its terms of employment (including compensation) of newly hired employees other than executive officers and in the Ordinary Course of Business and (B) amendments the expiration of any Real Property Lease in accordance with its terms;
(xxii) bid, offer, or seek to employment agreements required provide service under any U.S. government contract that requires the Company to cause such agreements have a facility security clearance or otherwise subjects the Company to not be subject a Defense Counterintelligence and Security Agency review pursuant to Section 409A the National Industrial Security Program;
(xxiii) provide common carrier telecommunications services in the United States or seek authority to hold common carrier licenses or authorizations pursuant to the Communications Act; or
(xxiv) agree to take, make any commitment to take, or adopt any resolutions of the CodeCompany Board in support of, or, if subject to Section 409A any of the Codeforegoing.
(c) Except as expressly contemplated by this Agreement, none of Parent, Merger Sub or the Company shall take or permit any of their respective Subsidiaries to not result in take any action that would reasonably be expected to prevent or to materially impede, hinder or delay the application consummation of the additional Tax thereunder Merger and the other transactions contemplated hereby.
(providedd) Nothing contained in this Agreement shall give Parent or Merger Sub, that any such amendment does not materially expand directly or indirectly, the benefits right to be received thereunder); provided, however, that control or direct the operations of the Company and or any of its Subsidiaries may pay cash bonuses and other cash incentive compensation Subsidiaries, or to take any action that could potentially be viewed as a change of control under the FCC’s rules, in respect of calendar year 2016 either case prior to the Persons Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and in the amounts set forth in Section 6.1(k) conditions of the Disclosure Schedule;this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.
Appears in 1 contract
Samples: Merger Agreement (ORBCOMM Inc.)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from between the date of this Agreement to and the earlier to occur of (i) the date of the termination of Effective Time and the date, if any, on which this Agreement is terminated pursuant to Section 8.1, except (a) as may be required by Law, (b) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (c) as may be expressly required pursuant to this Agreement or as necessary to effect the transactions contemplated hereby, or (iid) as set forth in Section 6.1 of the Company Disclosure Letter, (x) the Effective Time, business of the Company shalland its Subsidiaries shall be conducted only in, and such entities shall cause each not take any action except in the ordinary course of its Subsidiaries to, business and in a manner consistent with past practice in all material respects carry on its business in the regular respects, and ordinary course and, to the extent consistent therewith, the Company shall use its commercially reasonable best efforts to preserve substantially intact its current business organization, keep available the services of and to preserve in all material respects its current officers and employees and preserve its present relationships with key customers, suppliers and others having other Persons with which it has material business dealings with it. Without relations; and (y) without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) amend or otherwise change, in any material respect, the Certificate of Incorporation or the Amended and Restated Bylaws of the Company (xor such equivalent organizational or governing documents of any of its Subsidiaries);
(b) split, combine, reclassify, redeem, repurchase or otherwise acquire or amend the terms of any capital stock or other equity interests or rights;
(c) except for transactions among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, or as otherwise contemplated by Section 6.1(f), issue, sell, pledge, dispose, encumber or grant any shares of its or its Subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its Subsidiaries’ capital stock; provided, however that the Company may issue shares of Company Common Stock upon the exercise of any vested Company Option, or payment of any Company Restricted Stock Unit that becomes vested, in either case (A) as is outstanding as of the date hereof and set forth in Section 4.2(a) of the Company Disclosure Letter or (B) as may be granted after the date hereof in accordance with Section 6.1(f);
(d) declare, set aside authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock or other equity interests, other than (i) dividends onpaid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Company and (ii) quarterly cash dividends in an amount not to exceed $0.05 per share of Company Common Stock consistent with past practice with record dates consistent with the record dates for comparable quarterly periods of 2012, and provided that no dividend will be payable if the Effective Time occurs on or prior to the applicable record date;
(e) except as required pursuant to existing written Company Benefit Plans in effect as of the date hereof, or as otherwise required by applicable Law, or as permitted under Section 6.1(f): (i) grant or increase the compensation payable or to become payable or benefits provided or to be provided to (A) any member of any board of directors, or (B) any current or former employees or independent contractors of the Company or any of its Subsidiaries, except in the ordinary course of business of the Company consistent with its 2012 past practice through its compensation review process conducted in the first quarter of calendar year 2013 in respect of such year with respect to the (I) normal annual rate of base salary increases for current employees of the Company and its Subsidiaries and (II) normal establishment of the target annual cash bonus opportunities under the applicable Company Benefit Plans that provide for annual cash bonus opportunities; (ii) except under applicable Company Benefit Plans for newly hired employees (below the level of executive officer) hired to fill vacancies in the ordinary course of business of the Company consistent with its past practice, grant the opportunity to participate in any severance or termination pay plans; (iii) enter into any severance agreement with, any member of any board of directors, employee or consultant of the Company or any of its Subsidiaries, or (iv) establish, adopt, enter into or amend any Company Benefit Plan (or any arrangement which in existence as of the date hereof would constitute a Company Benefit Plan), works council, collective bargaining or other labor agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees or any of their beneficiaries;
(f) except as set forth in Section 6.1(f) of the Company Disclosure Letter, grant, confer or award, any Company Options, convertible securities, restricted stock, Company Restricted Stock Units or other rights to acquire any of its or its Subsidiaries’ capital stock (including any dividend equivalent rights or phantom stock units denominated in shares of Company Common Stock), whether settled in cash or shares of Company Common Stock, other than any phantom stock units on Company Common Stock that are required, as of the date of this Agreement pursuant to elections previously made by members of the Company’s board of directors, to be credited under the Company Phantom Stock Plan for Outside Directors in accordance with the terms thereof;
(g) acquire (including by merger, consolidation, or acquisition of stock or assets), except in respect of any merger, consolidation, business combination among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, any corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof, except with respect to acquisitions with collective purchase prices not exceeding $10,000,000 in the aggregate, or sell, lease, license, abandon, encumber or otherwise subject to a Lien, other than a Permitted Lien (excluding, solely for the purpose of this Section 6.1(g), clauses (ii), (iii), (v) and (vii) of the definition of Permitted Lien) or Liens incurred in connection with any refinancing of existing indebtedness, or otherwise dispose of any properties, rights or assets of the Company or its Subsidiaries having a value exceeding $5,000,000 individually or in the aggregate; other than (1) sales of inventory in the ordinary course of business consistent with past practice or (2) pursuant to agreements existing as of the date hereof to the extent provided to Parent or Acquisition Sub on or prior to the date hereof;
(h) repurchase, redeem, defease, cancel, prepay, forgive, issue, sell or otherwise incur, or modify in any material respect the terms of, any indebtedness for borrowed money or any debt securities of the Company or any of its Subsidiaries, or assume or guarantee or otherwise become responsible for any such indebtedness for any Person (other than a Subsidiary), or make any other actualmaterial loans, constructive advances or deemed distributions in respect ofcapital contributions to, or investments in, any of its capital stockPerson, except for indebtedness incurred (i) under the Company’s existing credit facilities or otherwise make incurred to replace, renew, extend, refinance or refund any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record existing indebtedness on a date no earlier than March , 2017market terms and conditions, (yii) splitpursuant to agreements in effect prior to the execution of this Agreement and disclosed in Section 6.1(h) of the Company Disclosure Letter, combine (iii) incurred under letters of credit in the ordinary course of business or reclassify any (iv) as otherwise required in the ordinary course of its capital stock or issue or authorize business consistent with past practice, and, with respect to the issuance of any other securities in respect offoregoing clauses (i), (ii), (iii) and (iv), in lieu of an aggregate amount not to exceed $20,000,000;
(i) enter into, modify, amend, cancel or in substitution for shares of its capital stock or (z) purchaseterminate any Company Material Contract, redeem or otherwise acquire any shares of capital stock Contract that contains a covenant materially restricting the ability of the Company or any of its Subsidiaries from operating in any significant line of business or any other securities thereof significant geographical area or any rightsContract that, warrants or options to acquire any such shares or other securities (if in effect on the date of this Agreement, would be a Company Material Contract, except for immaterial modifications and amendments in accordance with the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)terms thereof;
(bj) make any material change to its methods of accounting in effect at December 31, 2012, except (xi) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent as required by GAAP (or any securities convertible intointerpretation thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any rightssimilar organization), warrants or options (ii) to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for permit the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries audit of the Company, including foreign Subsidiaries, which are ’s financial statements in compliance with GAAP or (iii) as required or may be required under the existing terms of borrowings or indebtedness)by a change in applicable Law, (yiv) except as contemplated by this Agreement, amend, waive or otherwise modify disclosed in the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)SEC Documents;
(ck) amend its Certificate make capital expenditures in the aggregate (or any authorization or commitment with respect thereto) in excess of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary 125% of the Companyaggregate amount of capital expenditures made by the Company in 2012;
(dl) except as required for this Agreement adopt or enter into a plan of complete or partial liquidation or dissolution, restructuring, recapitalization, or other reorganization;
(m) settle or compromise any litigation other than settlements or compromises of litigation where the amount paid (less the amount reserved for such matters by contractual commitments existing the Company) in settlement or compromise, in each case, does not exceed the amount set forth in Section 6.1(m)(i) of the Company Disclosure Letter and which do not impose any material restrictions on the date hereofoperations or businesses of the Company or its Subsidiaries, acquire or agree taken as a whole; provided that, with respect to acquirethe matters specifically described in Section 6.1(m)(ii) of the Company Disclosure Letter, except for purchases the limitation set forth in Section 6.1(m)(i) of raw materials, suppliesthe Company Disclosure Letter shall not apply and the Company shall consult with, and inventory in obtain the Ordinary Course express written consent of Business(which consent shall not be unreasonably withheld, by merging conditioned or consolidating withdelayed), Parent prior to settling or by purchasing a substantial portion of the assets of or equity in, or by compromising any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:such matter;
(i) is substantially consistent in naturemake or change any Tax election or change any method of Tax accounting, scope, and magnitude with the past practices of the Company;
or (ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken other than in the ordinary course of the normalbusiness, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of BusinessTax Return, settle or compromise any material pending Tax liability, agree to an extension or threatened suitwaiver of the statute of limitations with respect to the assessment or determination of material Taxes, action enter into any closing agreement with respect to any material Tax or claim, other than settlements or compromises requiring payments by the Company or surrender any right to claim a refund for a material amount of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregateTax;
(jo) pay, discharge effect or satisfy any material claims, liabilities permit a “plant closing,” “mass layoff” or obligations, other than similar event under the payment, discharge or satisfaction in WARN Act without complying with all provisions of the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;WARN Act; or
(kp) (x) increase in authorize, commit or otherwise enter into any manner the compensation and employee benefits of agreement to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;foregoing.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) Except as otherwise expressly contemplated permitted by this Agreement or as set forth in the Disclosure ScheduleAgreement, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects :
(i) carry on its business in the regular and ordinary course and, of its business consistent with past practice and take no action which would reasonably be expected to adversely affect its ability to consummate the extent consistent therewith, transactions contemplated by this Agreement;
(ii) use its commercially reasonable best efforts to preserve intact its current business organizationorganizations and goodwill, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. ; and
(iii) comply in all material respects with all laws and regulations applicable to it or any of its properties, assets or business.
(b) Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by between the date of this Agreement or as set forth in and the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IXEffective Time, the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(ai) (xA) other than any dividends paid by wholly-owned Subsidiaries, 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 otherwise make any payments to its stockholders in their capacity as such, (B) other than in the regular quarterly dividend case of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March any Subsidiary, 2017, (y) split, combine or reclassify any of its capital stock 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 (zC) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (xii) issue, reissue, deliver, sell, pledge, grant, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Stock Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent any other ownership interest (other than for the issuance of shares upon the exercise of Options including stock appreciation rights, phantom stock and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtednessstock-based performance units), (y) except as contemplated by this Agreement, amend, waive or otherwise modify in the terms ordinary course of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection business consistent with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)past practice;
(ciii) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the CompanyOrganizational Documents;
(div) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or any equity interest in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets;
(v) sell, lease, pledge or otherwise dispose of or encumber, or agree to sell, lease, pledge or otherwise dispose of or encumber, any of its assets that have with a fair market value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1aggregate, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to other than sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, inventory that are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; andbusiness consistent with past practice;
(ivvi) does not require authorization by the Company’s board of directors (incur any indebtedness for borrowed money, guarantee any such indebtedness or committee of the board of directors) and does not require make any loans, advances or capital contributions to, or other capital contributions or investments in, any other separate Person, other than (A) in the ordinary course of business consistent with past practices or special authorization of any nature (that isB) indebtedness, is in accordance with loans, advances, capital contributions and investments between the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, Company and any of its assets that have a value wholly-owned Subsidiaries or between any of such wholly-owned Subsidiaries, in excess of $100,000 individually or in excess of $500,000 each case in the aggregate during any calendar month, except sales ordinary course of inventory or obsolete assets in the Ordinary Course of Businessbusiness consistent with past practices;
(fvii) except as permitted by clauses alter (dthrough merger, liquidation, reorganization, restructuring or in any other fashion) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend the corporate structure or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement ownership of the Company or any of its Subsidiaries ifor adopt a plan of complete or partial liquidation, in each casedissolution, such contractmerger, agreementconsolidation, commitmentrestructuring, venture, lease recapitalization or management agreement involves or could reasonably be expected to involve the receipt or payment by other reorganization of the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in (other than the aggregate (except for hedging arrangements in the Ordinary Course of BusinessMerger);
(gviii) (x) except as contemplated by Section 7.11 hereof reclassify, combine, split, subdivide or for borrowings incurred in the Ordinary Course redeem, purchase or otherwise acquire, directly or indirectly, any shares of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters capital stock of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries or any securities convertible into or exercisable for any such shares of no more its capital stock or securities, other than pursuant to Options outstanding as of the date hereof in accordance with their respective terms;
(ix) make any change to accounting methods, policies or procedures used by it as of the date hereof (other than actions required to be taken by GAAP);
(x) except as set forth in Section 5.1(b)(x) of the Disclosure Schedule, enter into, amend or terminate any agreement or contract (A) having a term in excess of 12 months and that is not terminable by the Company or a Subsidiary without penalty or premium by notice of 60 days or less or (B) outside the ordinary course of business consistent with past practice, which involves or is expected to involve payments of $100,000 individually and or $500,000 per month in the aggregateaggregate or more during the term thereof (provided that in the case of agreements or contracts with any customer, the margins anticipated from any such agreement or contract shall be consistent in all material respects with historical margins); enter into, amend or terminate any other agreement or contract material to the Company and its Subsidiaries, taken as a whole; or purchase any real property, or make or agree to make any new capital expenditure or expenditures (other than the purchase of real property or capital expenditures set forth on Section 5.1(b)(x) of the Disclosure Schedule) that are in excess of $100,000 individually or $500,000 in the aggregate and not modify or amend, or terminate a waiver or release or assign any material rights or claims with respect to, any material agreement or arrangement to which it is a party;
(jxi) Except as set forth on Section 5.1(b)(xi) of the Disclosure Schedule (A) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations in the Ordinary Course ordinary course of Business of liabilities reflected business consistent with past practice or reserved against inin accordance with their terms, (B) cancel any material indebtedness (individually or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate) or waive any claims or rights of substantial value or (C) waive the benefits of, or agree to modify in any manner, any confidentiality, standstill or similar agreement to which it is a party;
(kxii) promptly deliver to Parent true and correct copies of any report, statement or schedule filed with the SEC subsequent to the date of this Agreement;
(xxiii) increase in not modify, extend the term or forgive or cancel any manner outstanding loans owed to the compensation and employee benefits of Company or any of its Subsidiaries by any current or former directors, executive officers and other key officers, employees, hire consultants or independent contractors of such entities;
(xiv) except as set forth in Section 5.(b)(xiv) of the Disclosure Schedule, not make any new employees (other than to replace an employee whose employment has terminated)loans, advances or capital contributions to, or pay investments in any pension or retirement allowance other Person;
(xv) not required by law or any existing plan or agreement to any such employees, (y) become a party toalter, amend or commit itself revoke any tax election or method of accounting with respect to taxes or settle or compromise any material tax claim;
(xvi) maintain insurance on its tangible assets and its business in such amounts and against such risks and losses as are currently in effect;
(xvii) except as required in accordance with GAAP, not revalue any of its assets, including, without limitation, writing down the value of its inventory or writing off notes or accounts receivables other than in the ordinary course of business consistent with past practice;
(xviii) pursuant to or within the meaning of any bankruptcy law, not (A) commence a voluntary case, (B) consent to the entry of an order for relief against it in an involuntary case, (C) consent to the appointment of a custodian of it or for all or substantially all of its property or (D) make a general assignment for the benefit of its creditors;
(xix) other than in the ordinary course of business, not amend, modify, assign, terminate, reject, cancel or fail to exercise a right of renewal or extension, with respect to any pensionmaterial Contract relating to Intellectual Property;
(xx) not settle any legal proceedings, retirementwhether now pending or hereafter made or brought, profit-sharing except to the extent of any accruals therefor in the Company's Financial Statements;
(xxi) except as set forth on Section 5.1(b)(xxi) of the Disclosure Schedule, not apply any of its assets or welfare benefit plan properties to the direct or agreement indirect payment, discharge, satisfaction or employmentreduction of any amount payable directly or indirectly, severance or change in control agreement with to or for the benefit of any employee, Related Party or enter into any transaction with a Related Party (except for payment of salary and other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers customary expense reimbursements made in the Ordinary Course ordinary course of Business and (B) amendments business to employment agreements required to cause such agreements to not be subject to Section 409A Related Parties who are employees, directors or officers 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); provided, however, that the Company and its Subsidiaries. "Related Party" means any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) affiliate, associate, shareholder, officer, director, employee or agent of the Disclosure ScheduleCompany or any Subsidiary or any member of his or her family by blood or marriage;
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement to hereof and until the Merger Effective Time or earlier to occur of (i) the date of the termination of this Agreement (the “Pre-Closing Period”), unless SES shall otherwise agree in writing (which agreement shall not be unreasonably withheld, conditioned or (ii) the Effective Timedelayed), the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on :
(a) conduct its business in the regular and ordinary course andof business consistent with past practice;
(b) not make capital expenditures or enter into any binding commitment or contract to make capital expenditures, except (i) capital expenditures which the Company is currently committed to make, (ii) capital expenditures in the ordinary course of the Company’s business, (iii) capital expenditures for repairs and other capital expenditures necessary in light of circumstances not anticipated as of the date of this Agreement which are necessary to avoid significant disruption to the extent Company’s business or operations consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoingpast practice, and (iv) repairs and maintenance in the ordinary course of business;
(c) not (i) amend or propose to amend its Governing Documents, except as otherwise expressly contemplated agreed to by this Agreement the parties hereto, (ii) split, combine, subdivide or as set forth in the Disclosure Schedulesreclassify any shares of outstanding Capital Stock, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):
(a) (xiii) declare, set aside or pay any dividends ondividend or distribution payable in cash, stock, property or otherwise, or make any other actual, constructive or deemed distributions distribution in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (y) split, combine or reclassify any of its capital stock 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 Capital Stock, or (ziv) purchaserepurchase, redeem or otherwise acquire acquire, or modify or amend, any shares of capital stock of the Company or any of its Subsidiaries Capital Stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(bd) not, nor shall it permit any of its Subsidiaries to (xi) issue, deliversell, pledge, grant or dispose of, or agree to issue, sell, pledge, grant or dispose of, any equity awards under any Company incentive plans, or any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, its Capital Stock of any class or any debt or equity securities convertible into or exchangeable for its Capital Stock, or (ii) incur or assume any indebtedness for borrowed money or guarantee any indebtedness or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries;
(e) not, nor shall it permit any of its Subsidiaries to (i) merge, consolidate, combine or amalgamate with any Person other than a wholly-owned Subsidiary of the Company or its Subsidiaries, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its Capital Stock or any options, warrants or rights to acquire any of its Capital Stock or any security convertible into or exchangeable for its Capital Stock, (iii) make any acquisition of any Capital Stock, assets or businesses of any other Person in excess of $1,000 individually other than expenditures for current assets in the ordinary course of business consistent with past practice and expenditures for fixed or capital assets in the ordinary course of business consistent with past practice, (iv) sell, pledge, dispose of or otherwise encumber any shares of assets or businesses that are material to the Company or its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness)except, (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales each of inventorythe foregoing, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and(A) sales, if sales involve a new customerleases, are fully credit insured rentals and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken licenses in the ordinary course of business consistent with past practice, (B) pursuant to contracts that are in force at the normal, day-to-day operations date of this Agreement and are disclosed in Section 4.10 of the Company; and
Company Disclosure Schedule, and (C) sales, leases or dispositions not to exceed $1,000 individually, or (v) enter into any contract with respect to any of the foregoing items (i) through (iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business);
(f) except use commercially reasonable efforts to preserve intact its business organization and goodwill, keep available the services of its present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with it, other than as expressly permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement the terms of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business)this Agreement;
(g) (x) except as contemplated by Section 7.11 hereof not adopt a plan or for borrowings incurred in the Ordinary Course agreement of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases complete or other similar instruments, partial liquidation or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000dissolution;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) not pay, discharge or satisfy any material claims, material liabilities or obligationsmaterial obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (i) of any such material claims, material liabilities or material obligations in the Ordinary Course ordinary course of Business business consistent with past practice or (ii) of material claims, material liabilities or material obligations reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto);
(i) not enter into any contract that restrains, limits or incurred impedes the ability of the Company or the Surviving Company to compete with or conduct any business or line of business, including geographic limitations on the activities of the Company;
(j) not make any changes in the Ordinary Course of Business financial or relating to matters expressly permitted by clauses Tax accounting methods, principles or practices (d) or (echange an annual accounting period), except insofar as may be required by a change in Australian Accounting Standards, International Financial Reporting Standards or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregateapplicable Law;
(k) (x) not enter into, amend, modify or renew any employment, consulting, severance or similar contract with, pay any bonus or grant any material increase in salary, wage or other compensation or any increase in any manner employee benefit to, any of its directors, officers or employees, except in each such case (i) as may be required by applicable Law, or (ii) to satisfy obligations existing as of the compensation and date hereof pursuant to the terms of contracts that are in effect on the date hereof;
(l) not enter into, establish, adopt, amend or modify any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefits benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any of its directors, executive officers and other key or employees, hire any new employees except, in each such case (other than i) as may be required by applicable Law or pursuant to replace an employee whose employment has terminated)the terms of this Agreement, or pay (ii) to satisfy obligations existing as of the date hereof pursuant to the terms of contracts that are in effect on the date hereof;
(m) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date hereof or as expressly provided by this Agreement, not accelerate the payment, right to payment or vesting of any pension or retirement allowance not required by law or any existing plan or agreement to any such employeesbonus, (y) become a party toseverance, amend or commit itself to any pensionprofit sharing, retirement, profit-sharing deferred compensation, stock option, insurance or welfare benefit plan other compensation or agreement or employment, severance or change in control agreement with or for benefits;
(n) not agree to the benefit settlement of any employeeclaim, litigation, investigation or other action that is material to it;
(o) except in the ordinary course of the Company’s business, not materially modify or amend, or terminate any Company Material Contract, or waive, relinquish, release or terminate any material right or material claim, or enter into any contract that would have been a Company Material Contract if it had been in existence at the time of the execution of this Agreement; and
(p) not agree to take any of the foregoing actions, other than (ASection 5.01(a) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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 thereunderf); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth disclosed in Section 5.01 of the Company Disclosure Schedule, during the period from after the date of this Agreement hereof and prior to the Effective Time or earlier to occur of (i) the date of the termination of this Agreement Agreement, unless Parent shall otherwise agree in writing (which agreement shall not be unreasonably withheld or (ii) the Effective Timedelayed), the Company shall, and shall cause each of its Subsidiaries subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld)::
(a) conduct their respective businesses in the ordinary course of business consistent with past practice, including with respect to casino credit policies;
(xb) not (i) amend or propose to amend their respective articles of incorporation or bylaws or equivalent constitutional documents, (ii) split, combine or reclassify their outstanding capital stock, (iii) declare, set aside or pay any dividends ondividend or distribution payable in cash, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, property or otherwise make any payments to its stockholders in their capacity as suchotherwise, other than except for (x) the regular quarterly payment of the dividend of not greater than $.04 $ .27 per Share payable to stockholders of record share declared by the Company on a date no earlier than March June 2, 2017, 2004 and (y) split, combine the payment of dividends or reclassify any distributions to the Company or a wholly owned subsidiary of its capital stock the Company by a direct or issue or authorize indirect wholly owned subsidiary of the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock Company or (ziv) purchaserepurchase, redeem or otherwise acquire acquire, or modify or amend, any shares of the capital stock of the Company or any of its Subsidiaries subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of, their capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock, except that the Company may (except i) issue shares upon the exercise of Options outstanding on the date hereof, and (ii) grant Options pursuant to obligations existing on June 10, 2004.
(d) not (i) incur or become contingently liable with respect to any indebtedness for borrowed money other than (A) borrowings in the withholding ordinary course of business consistent with past practice, and (B) borrowings to refinance existing outstanding indebtedness on terms which are reasonably acceptable to Parent; provided that in no event shall aggregate indebtedness of the Company and its subsidiaries, net of all cash and cash equivalents, exceed $3,200,000,000, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of Common Stock its capital stock or any options, warrants or rights to acquire any of its capital stock or any security convertible into or exchangeable for its capital stock other than in connection with Taxes payable in respect of the exercise of Options);
outstanding Options pursuant to the terms thereof, (biii) make any acquisition of any assets or businesses other than expenditures for current assets in the ordinary course of business consistent with past practice and expenditures for fixed or capital assets in the ordinary course of business consistent with past practice, (xiv) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities assets or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (businesses other than (A) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the issuance buyer of shares upon the exercise of Options and for pledges such real estate, assets or facilities) to non-affiliates of the stock Company of less than $1,000,000 in each such case and $7,000,000 in the Subsidiaries aggregate, (B) sales or dispositions of the Company, including foreign Subsidiaries, which are required businesses or assets as may be required under by applicable law, and (C) sales or dispositions of assets in the existing ordinary course of business consistent with past practice or (v) enter into any binding contract, agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them, other than as expressly permitted by the terms of borrowings or indebtedness), (y) except as contemplated by this Agreement;
(f) not enter into, amend, waive modify or otherwise renew any employment, consulting, severance or similar agreements with, pay any bonus or grant any increase in salary, wage or other compensation or any increase in any employee benefit to, any directors, officers or employees of the Company or its subsidiaries, except in each such case (i) as may be required by applicable law (ii) to satisfy obligations existing as of the date hereof or (iii) in the ordinary course of business consistent with past practice;
(g) not enter into, establish, adopt, amend or modify the terms any pension, retirement, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare plan, agreement, program or arrangement, in respect of any directors, officers or employees of the Company or its subsidiaries, except, in each such rights, warrants case (i) as may be required by applicable law or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
this Agreement, (cii) amend its Certificate to satisfy obligations existing as of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire including pursuant to any collective bargaining agreement or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially business consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) not make capital expenditures or enter into any binding commitment or contract to make capital expenditures, except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by capital expenditures which the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating subsidiaries are currently committed to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employeesmake, (yii) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement capital expenditures consistent with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) the Company’s consolidated capital spending budget (a copy of which for fiscal year 2005 has been delivered to Parent prior to the date hereof and for fiscal year 2006 will be prepared by the Company and to be approved by Parent, such approval not to be unreasonably withheld or delayed), plus additional capital expenditures up to an amount not exceeding 10% of the Disclosure Schedule;amounts set forth in such budget, (iii) capital expenditures for emergency repairs and other capital expenditures necessary in light of circumstances not anticipated as of the date of this Agreement which are necessary to avoid significant disruption to the Company’s business or operations consistent with past practice (and, if reasonably practicable, after consultation with Parent), or (iv) repairs and maintenance in the ordinary course of business consistent with past practice; and
(i) not make, change or revoke any material Tax election unless required by law or make any agreement or settlement with any taxing authority regarding any material amount of Taxes or which would reasonably be expected to materially increase the obligations of the Company or the Surviving Corporation to pay Taxes in the future.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from the date of this Agreement prior to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, unless Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), or except as expressly permitted or required pursuant to this Agreement or Section 5.1 of the Company shallDisclosure Letter, or as expressly required by applicable Law:
(a) the business of the Company shall be conducted only in the ordinary course of business consistent with past practices, and the Company shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its commercially reasonable best efforts to maintain and preserve intact its current business organizationorganization and goodwill, to keep available the services of its current officers and employees and to preserve and maintain its beneficial business relationships with suppliers, contractors, distributors, customers, suppliers landlords, licensors, licensees and others having material business dealings relationships with it. Without the Company; and
(b) without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of foregoing Section 7.5 and Article IX5.1(a), the Company shall not, and shall cause each not do any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):following:
(ai) (x) 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 otherwise make any payments to its stockholders in their capacity as such, other than in the regular quarterly dividend ordinary course of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March business consistent with past practice and except as permitted by Section 5.1(b)(iii), 2017acquire, (y) splitsell, combine lease, license, transfer or reclassify any of its capital stock or issue or authorize the issuance dispose of any other securities in respect ofassets, in lieu of rights or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Optionsother than material Company Intellectual Property);
(bii) (x) issueterminate, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible intocancel, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or optionsmaterially modify, or (z) except as contemplated by this Agreemententer into any new, accelerate the vesting line of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)business;
(ciii) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, with or by purchasing a substantial portion an equity interest in or any of the assets of or equity inof, or by any other manner, any business or any business, corporation, partnership, association or other business organization or division thereof thereof, if the amount of consideration paid or transferred by the Company would exceed $300,000, other than the purchase of goods and services in the ordinary course of business;
(iv) amend its certificate of incorporation or bylaws;
(v) declare, set aside or pay any dividend or other distribution, whether payable in cash, capital stock, property or otherwise, with respect to any shares of its capital stock;
(vi) 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, other than in connection with (A) the relinquishment of shares by current or former directors, officers, employees, consultants or other service providers of the Company in payment of withholding Taxes upon the vesting of Restricted Stock awards, (B) the cashless or net exercise of Options (including in payment of withholding Taxes) or (C) the purchase of shares of Company Common Stock from any current or former director, officer, employee, consultant or other service provider for cash at any price less than the Merger Consideration;
(vii) split, combine or reclassify any outstanding shares of its capital stock;
(viii) except for (A) the Company Common Stock issuable upon exercise or conversion of Options outstanding on the date hereof (or granted after the date hereof as permitted by this Agreement), (B) the vesting of Restricted Stock awards granted prior to the execution of this Agreement (or granted after the date hereof as permitted by this Agreement) and (C) the issuance of Company Common Stock pursuant to the Fiscal 2012 Director Compensation Program, issue, grant, sell, transfer, pledge, dispose of or reprice, or authorize, propose or agree to the issuance, grant, sale, transfer, pledge, disposition by or repricing by, the Company of, any shares of, or any options, warrants, or rights of any kind to acquire any assets that have a value shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any other securities in excess of $100,000 individually respect of, in lieu of, or in excess substitution for any class of its capital stock outstanding on the date hereof;
(ix) incur any Indebtedness or guarantee any Indebtedness of another Person, except (A) Indebtedness incurred or guaranteed in the ordinary course of business consistent with past practice which in any event shall not exceed $500,000 225,000 in the aggregate, (B) renewal or replacement of the Loan Agreement dated December 30, 2010 by and between the Company, the lenders named therein and Middlesex Savings Bank, as Administrative Agent for those lenders (the “Middlesex Loan”) on substantially the same terms or other commercially reasonable terms, (C) renewal or replacement of letters of credit outstanding on the date hereof, (D) Indebtedness related to new capital leases of equipment in an amount not to exceed $250,000 in the aggregate during and (E) renewals or replacements of Indebtedness outstanding under capital leases outstanding on the date hereof or described in clause (D) above, provided that, in the case of clauses (B), (C) and (E), the amount of Indebtedness outstanding under the renewed or replacement Middlesex Loan, letters of credit and capital leases, respectively, shall not (except as permitted by clause (A)) exceed the amount of the Indebtedness outstanding thereunder on the date hereof;
(x) make any calendar month; For purposes loans, advances or capital contributions to or investments in any other Person, except for (A) extensions of credit to customers or suppliers in the ordinary course of business and (B) advances of expenses to employees in amounts that do not exceed $15,000 at any one time;
(xi) mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject to any other Lien, in each case other than Permitted Liens, any assets of the Company, except pursuant to the terms of Indebtedness described in Section 5.1(b)(ix) or renewals or replacements thereof;
(xii) (A) grant or increase any severance or termination pay to any current or former director or Executive Officer or, other than in the ordinary course of business and consistent with the terms of the Company’s severance policy disclosed in Section 5.1 of the Company Disclosure Letter, any employee of the Company, (B) execute any employment, deferred compensation or other similar agreement (or any material amendment to any such existing agreement) with any director, Executive Officer or employee of the Company, (C) increase the benefits payable under, or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under, any compensation, severance, retention, termination, other profit-sharing, stock option or stock purchase policies, programs, arrangements or agreements, including employment agreements, other than pursuant to the terms of any such policies, programs, arrangements or agreements as in effect on the date hereof (it being understood that all Options and shares of Restricted Stock shall vest and become exercisable in full upon the consummation of the Merger), (D) increase the compensation, bonus or other benefits of current or former directors, Executive Officers or employees of the Company, except that, notwithstanding the foregoing, the Company may implement (1) salary increases that do not exceed $25,000 individually or $250,000 in the aggregate, and (2) corresponding increases in other forms of compensation that are based on salary, (E) adopt or establish any new Employee Benefit Plan or amend in any material respect any existing Company Employee Benefit Plan (other than renewals or replacements of existing Company Employee Benefit Plans in the ordinary course of business), or (F) provide any material benefit to a current or former director, Executive Officer or employee of the Company not required by any existing agreement or Company Employee Benefit Plan (or renewals or replacements thereof permitted by clause (E) above), except in the case of action under subsections (A) through (F), to the extent required by Law or the terms of a Company Employee Benefit Plan or written Contract in existence as of the date of this Agreement;
(xiii) execute or amend in any material respect any employment, consulting, severance or indemnification agreement between the Company and any of its directors, officers, agents, consultants or employees, except (A) as permitted by Section 6.15.1(b)(xii) and (B) renewals of existing arrangements with agents and consultants on substantially similar terms;
(xiv) enter into any collective bargaining agreement or other material obligation to any labor organization, or amend or modify any collective bargaining agreement, except as required by applicable Law;
(xv) change any material book or Tax accounting method other than as required by GAAP or applicable Law, or make, change or rescind any material Tax election, change an action taken will be deemed to have been taken annual accounting period, file any material amended Tax Return, enter into any material closing agreement with a Taxing Authority, settle any material Tax claim or assessment other than the payment of Taxes in the “Ordinary Course ordinary course of Business” only if business, knowingly surrender any right to claim a refund of a material amount of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment (other than an extension caused by validly extending the time for filing any Tax Return in the ordinary course of business), or fail to fully and timely pay any material amount of Taxes that action:becomes due and payable;
(ixvi) is substantially consistent settle, compromise or otherwise resolve any disputed claim or disputed liability, any material litigation, arbitration or other legal proceeding or any other material controversy, in natureeach case other than in an amount involving not more than $75,000 individually or $250,000 in the aggregate;
(xvii) other than in the ordinary course of business, scopepay or discharge any claims, and magnitude with Liens or liabilities involving more than $75,000 individually or $250,000 in the past practices aggregate;
(xviii) make or commit to make capital expenditures after October 1, 2011 that exceed in the aggregate (A) $700,000 on or before Mxxxx 00, 0000, (X) $950,000 on or before June 30, 2012 or (C) $1,200,000 on or before September 30, 2012;
(xix) enter into or commit to enter into any Lease involving payments by the Company of more than $150,000 annually;
(xx) enter into any agreement that materially limits or otherwise materially restricts the Company, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Parent or any Parent Subsidiary or any of their respective Affiliates or any successor thereto, from engaging or competing in any line of business or in any geographic area, other than renewals of existing arrangements in the ordinary course of business;
(xxi) adopt a plan or agreement of, or Company Board resolutions providing for or authorizing, a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company;
(iixxii) with respect (A) enter into any Contract that would have been a Company Material Contract pursuant to sales Section 3.18(b), Section 3.18(d) (except as permitted by Section 5.1(b)(xii) or Section 5.1(b)(xiii)), Section 3.18(j) (except as permitted by Section 5.1(b)(xii) or Section 5.1(b)(xiii)), Section 3.18(k), Section 3.18(m), Section 3.18(o), Section 3.18(q), Section 3.18(s), Section 3.18(t) (except as permitted by Section 5.1(b)(ix)) or Section 3.18(u) if entered into prior to the date hereof, or (B) materially amend or modify, or otherwise waive, release or assign any material rights, claims or benefits of inventorythe Company under, is reasonably expected any Contract described in clause (A) or any Company Material Contract disclosed in the Company Disclosure Letter pursuant to produce gross profit margins substantially consistent with gross profit margins for any of the last 12 months andSections listed in clause (A), if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
each case under this clause (iiiB) is taken other than in the ordinary course of business;
(xxiii) promise or commit to any employee that he or she will receive any increase in salary, bonus or other employee benefits after the normalClosing, day-to-day operations unless any such commitment is consistent with prior directives or documentation provided to the Company by Parent, or make any written communication to the employees of the Company; andCompany regarding any changes in their compensation after the Closing, unless such written communication is consistent in all material respects with either the terms of this Agreement or prior directives or documentation provided to the Company by Parent (in which case, the Company shall provide Parent with prior notice of and the opportunity to review and comment upon any such communications);
(ivxxiv) does not require authorization by terminate the Company’s board employment of directors (or committee any Executive Officer of the board of directorsCompany other than for good reason or for cause;
(xxv) fail to use commercially reasonable efforts to protect and does not require maintain in full force and effect any other separate material Company Intellectual Property owned by or special authorization of any nature exclusively licensed (that is, is in accordance with the authority delegated right or obligation to protect and maintain such Intellectual Property) to the person making the decision or taking the action.Company (including any Trade Secret);
(exxvi) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose ofassign, transfer, or agree to sellgrant any covenant, lease license, option or other right or interest to, or otherwise dispose of, any material Company Intellectual Property, except for (A) the grant of its assets that have a value in excess of $100,000 individually non-exclusive licenses to Intellectual Property (other than Trade Secrets) to the Company’s customers, distributors or in excess of $500,000 sales representatives in the aggregate during any calendar month, except sales ordinary course of inventory or obsolete assets business) and (B) the renewal of existing Contracts in the Ordinary Course ordinary course of Businessbusiness;
(fxxvii) except as permitted by clauses implement any “plant closing” or “mass layoff” under the WARN Act;
(dxxviii) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, take any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could action that would reasonably be expected to involve have a material adverse effect on the receipt Transactions or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in Company’s ability to consummate the aggregate (except for hedging arrangements in the Ordinary Course of Business);Transactions; or
(gxxix) (x) except as contemplated by Section 7.11 hereof take or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change agree to take any of the accounting principles or practices used actions precluded by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes theretoSection 5.1(a) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (eSection 5.1(b), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule, during the period from Subsequent to the date of this Agreement hereof and prior to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective TimeDate, the Company shallunless Purchaser shall otherwise consent in writing, and which consent shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoingnot be unreasonably withheld, and except as otherwise expressly specifically contemplated by this Agreement or as set forth in Agreement:
(a) the Disclosure Schedulesbusinesses of the Company and its subsidiaries shall be conducted only in, and subject neither the Company nor any of its subsidiaries shall take any action except in, the ordinary and usual course of business.
(b) the Company shall use reasonable efforts to preserve its business, organization and goodwill.
(c) the provisions of Section 7.5 Company shall confer on a regular basis with the Purchaser regarding material positive and Article IX, negative developments respecting the Company's business.
(d) the Company shall not
(i) increase the compensation payable to or to become payable to any director or executive officer, except for increases in salary or wages payable or to become payable in the ordinary course of business and shall cause each consistent with past practice; (ii) grant any severance or termination pay (other than pursuant to the normal severance policy of the Company or its Subsidiaries not subsidiaries as in effect on the date of this Agreement) to, without or enter into or amend any employment or severance agreement with, any director, officer or employee; (iii) establish, adopt or enter into any new employee benefit plan or arrangement; or (iv) except as may be required by applicable law, amend, or take any other actions (other than the prior written consent acceleration of Parent vesting or waiving of performance criteria permitted pursuant to the Company's employee benefit plans upon a change in control of the Company) with respect to, any of the Company's employee benefit plans; (which shall not be unreasonably withheld):
(a2) (x) declare, set aside declare or pay any dividends dividend on, or make any other actual, constructive or deemed distributions distribution in respect of, outstanding shares of capital stock, except for dividends by a subsidiary to the Company or another subsidiary; (3) (i) redeem, purchase or otherwise acquire any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock, or otherwise make any payments options, warrants or conversion or other rights to acquire any shares of its stockholders capital stock or any such securities or obligations (except in connection with the Outstanding Options in accordance with their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, terms); (yii) effect any reorganization or recapitalization; or (iii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for for, shares of its capital stock stock; (4) (i) issue, deliver, award, grant or sell, or authorize or propose the issuance, delivery, award, grant or sale (zincluding the grant of any security interests, liens, claims, pledges, limitations in voting rights, charges or other encumbrances) purchaseof, redeem or otherwise acquire any shares of any class of its capital stock of the Company (including shares held in treasury), any securities convertible into or exercisable or exchangeable for any of its Subsidiaries or any other securities thereof such shares, or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than as permitted for the issuance of shares upon the exercise of Outstanding Options and for pledges as of the stock date of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive ); or (ii) amend or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate options the vesting effect of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant which shall be to make such terms more favorable to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)holders thereof;
(c5) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing an equity interest in or a substantial portion of the assets of or equity inof, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof thereof, or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually any other person (other than the purchase of assets from suppliers or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken vendors in the ordinary course of business) in each case which are material, individually or in the normalaggregate, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
Company and its subsidiaries, taken as a whole; (e6) except to the extent required by contractual commitments existing on the date hereof, sell, lease lease, exchange, mortgage, pledge, transfer or otherwise dispose of, or agree to sell, lease lease, exchange, mortgage, pledge, transfer or otherwise dispose of, any of its material assets that have a value in excess or any material assets of $100,000 individually or in excess any of $500,000 its subsidiaries, except for dispositions in the aggregate during ordinary course of business and consistent with past practice; (7) solicit, initiate or knowingly encourage any calendar monthinquiries, except sales of inventory discussions or obsolete assets negotiations with any person (other than Purchaser or Acquisition) concerning any Acquisition Proposal (as defined in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (iiSection 8.1(c)) or enter into solicit, initiate or knowingly encourage any joint ventureeffort or attempt by any other person to do, lease make or management agreement seek an Acquisition Proposal or, unless required in order for the Board of Directors of the Company to comply with its fiduciary responsibilities, with a view to pursuing an Acquisition Proposal with such person, engage in discussions or other material agreement negotiations with or disclose any nonpublic information relating to the Company or any of its subsidiaries to such person or authorize or permit any of the officers, directors or employees of the Company or any of its Subsidiaries ifsubsidiaries or any investment banker, in each casefinancial adviser, such contractattorney, agreement, commitment, venture, lease accountant or management agreement involves or could reasonably be expected to involve the receipt or payment other representative retained by the Company or any of its Subsidiaries subsidiaries to take any such action. The Company shall immediately communicate to Purchaser in writing the terms of $100,000 per month individually any Acquisition Proposal which it may receive and $500,000 per month in shall not accept any such Acquisition Proposal unless the aggregate (except for hedging arrangements in the Ordinary Course Purchaser has had three days notice of Business)such Acquisition Proposal and its terms;
(g) (x) except as 8) adopt or propose to adopt any amendments to its Articles of Incorporation or By-Laws which would alter the terms of its capital stock or would have an adverse impact on the consummation of the transactions contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business this Agreement;
(including drawdowns as permitted by the Credit Agreement9) and for hedging arrangement substantially consistent with past practice, incur any additional obligation for borrowed money or purchase money indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
25,000, whether or not evidenced by a note, bond, debenture or similar instrument; (h10) except as may be required as a result of a change in law enter into any arrangement, agreement or in U.S. GAAP, change contract with any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
third party (i) except other than customers in the Ordinary Course ordinary course of Business, settle business) in excess of $25,000 that provides for an exclusive arrangement with that third party or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by is substantially more restrictive on the Company or any of its Subsidiaries of no more substantially less advantageous to the Company than $100,000 individually and $500,000 per month arrangements, agreements or contracts existing on the date hereof unless such arrangement is entered into in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (x) increase in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Code, business; 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated permitted by clauses (a) through (q) of this Agreement or as set forth in the Disclosure ScheduleSection 4.1, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course of its business as currently conducted and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with itit to the end that its goodwill and ongoing business shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject Company Letter (with specific reference to the provisions of Section 7.5 and Article IXapplicable subsection below), the Company shall not, and shall cause each not permit any of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Parent:
(a) (xi) other than dividends paid by wholly-owned Subsidiaries, 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 otherwise make any payments to its stockholders shareholders in their capacity as such, (ii) other than in the regular quarterly dividend case of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March any Subsidiary, 2017, (y) split, combine or reclassify any of its capital stock 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 (ziii) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options)securities;
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Company Stock Option Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for (i) the issuance of shares of Company Common Stock upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options outstanding on the date of this Agreement in accordance with their current terms, (other than any acceleration occurring in connection with ii) the Offer or issuance of shares of Company Common Stock pursuant to the Merger Stock Option Agreement, (iii) shares issuable upon the exercise of warrants outstanding as of the date hereof, and (iv) pursuant to the terms set forth in Section 4.1(b) of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)Letter;
(c) amend its Certificate of Incorporation the Company Charter or Byby-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companylaws;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companyassets;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets, except other than sales of inventory or obsolete assets that are in the Ordinary Course ordinary course of Businessbusiness consistent with past practice;
(f) incur any indebtedness for borrowed money (other than draws under the existing credit agreement with Silicon Valley Bank for use in the ordinary course of business consistent with past practices), guarantee any such indebtedness or make any loans, advances or capital contributions to, or other investments in, any other person (except as permitted by clauses set forth in Section 4.1(r) below), other than indebtedness, loans, advances, capital contributions and investments between the Company and any of its wholly-owned Subsidiaries or between any of such wholly-owned Subsidiaries, in each case in the ordinary course of business consistent with past practice;
(dg) and alter (ethrough merger, liquidation, reorganization, restructuring or in any other fashion) above the corporate structure or ownership of the Company or any Subsidiary;
(h) enter into or adopt any, or amend any existing, severance plan, agreement or arrangement or enter into or amend any Company Plan, collective bargaining, employment, or any consulting agreement or make any determinations not in the ordinary course of business consistent with respect to raw materialspast practice, inventoryunder any collective 36 bargaining agreement or Company Plan, supplies and obsolete assets, except as set forth in Section 4.1(h) of the Company Letter;
(i) amend increase the compensation payable or otherwise modifyto become payable to its directors, officers or terminate, any material contract, agreement employees (except for (A) increases in the ordinary course of business consistent with past practice in salaries or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement wages of employees of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by who are not officers of the Company or any of its Subsidiaries Subsidiaries, and (B) and a one-time payment of $100,000 per month individually and $500,000 per month in the aggregate (except 10,000 for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations each non-employee director of the Company in lieu of per-meeting fees in connection with the meetings of the Board of Directors to consider strategic alternatives for the Company and its Subsidiaries;
(iC) except in payments made to Mr. Test and Xx. Xxxxx such that the Ordinary Course fees received by them for 2001 were at an annual rate equal to $36,000) or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director or officer of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries Subsidiaries, or establish, adopt, enter into, or, except as may be required to comply with applicable law, amend in any material respect or take action to enhance in any material respect or accelerate any rights or benefits under, any labor, 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 no more than $100,000 individually and $500,000 per month in the aggregateany director, officer or employee;
(j) knowingly violate or knowingly fail to perform any obligation or duty imposed upon it or any Subsidiary by any applicable material federal, state or local law, rule, regulation, guideline or ordinance;
(k) make any change to accounting policies or procedures (other than actions required to be taken by generally accepted accounting principles);
(l) prepare or file any Tax Return inconsistent with its past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods;
(m) make or rescind any express or deemed election relating to Taxes or change any of its methods of reporting income or deductions for Tax purposes;
(n) commence any litigation or proceeding with respect to any material Tax liability or settle or compromise any material Tax liability without Parent's consent or commence any other litigation or proceedings or settle or compromise any other material claims or litigation;
(o) except as set forth in Section 4.1(o) of the Company Letter, enter into, renew, terminate or amend any agreement or contract material to the Company and its Subsidiaries, taken as a whole, including any Significant Contract but excluding any contracts for the sale by the Company of scanners and including, without limitation, any lease amendment or extension related to the real property leased under the terms of the 37 Lease between August Xxxxxxxx and the Company dated December 31, 1998, any agreement with Cedara Software, and any agreement with AccuImage Diagnostics Corp.; or purchase any real property or make or agree to make any new capital expenditure or expenditures which real property purchases or capital expenditures in the aggregate are in excess of $500,000;
(p) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction satisfaction, in the Ordinary Course ordinary course of Business business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements most recent financial statements (or the notes thereto) of the Company included in the Company SEC Documents or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practice;
(kq) (x) increase in any manner the compensation and employee benefits of authorize, recommend, propose or announce an intention to do any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated)the foregoing, or pay enter into any pension contract, agreement, commitment or retirement allowance not required arrangement to do any of the foregoing; or
(r) make any loans or advances to or other investments in, Positron Corporation including, without limitation, any additional advances under the Loan Agreement dated June 29, 2001 by law or any existing plan or agreement to any such employeesand between Positron Corporation and the Company, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers which consent in the Ordinary Course case of Business and this Subsection (Br) amendments to employment agreements required to cause such agreements to shall 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;unreasonably withheld.
Appears in 1 contract
Samples: Merger Agreement (Imatron Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated permitted by clauses (a)(i) through (xxviii) of this Agreement or as set forth in the Disclosure ScheduleSection 4.1, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) through the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course of its business as currently conducted and, to the extent consistent therewith, use its commercially reasonable best efforts to preserve intact its current business organizationorganizations, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with itit to the end that its goodwill and ongoing business shall be unimpaired in all material respects at the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject Company Letter (with specific reference to the provisions of Section 7.5 and Article IXapplicable subsection below), prior to the Effective Time:
(a) The Company shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of Parent (which shall not be unreasonably withheld):Buyer:
(ai) (xA) 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 otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yB) split, combine or reclassify any of its capital stock 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 stock, or (zC) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for other than the withholding redemption or repurchase at cost of shares repurchased from employees upon termination of Common Stock in connection with Taxes payable in respect of the exercise of Optionsemployment);
(b) (xii) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options (including options under the Company Stock Option Plans) to acquire, acquire any such shares, voting securities securities, equity equivalent or convertible securities or equity equivalent (securities, other than for the issuance of shares of Company Common Stock upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring outstanding on the date of this Agreement in connection accordance with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)their current terms;
(ciii) amend its Certificate of Incorporation the Company Charter or Byby-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Companylaws;
(div) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken not in the ordinary course of business;
(v) alter through merger, liquidation, reorganization, restructuring or any other fashion the normal, day-to-day operations corporate structure of any Subsidiary of the Company; andCompany (other than any wholly owned Subsidiary or foreign Subsidiary that would be wholly owned but for a nominal number of director or similar shares being owned by a foreign national as required by the law of the jurisdiction of such foreign Subsidiary's organization);
(ivvi) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthassets, except other than sales of inventory or obsolete assets that are in the Ordinary Course ordinary course of Businessbusiness consistent with past practice;
(fvii) incur any indebtedness for borrowed money, guarantee any such indebtedness or make any loans, advances or capital contributions to, or other investments in, any other Person, except pursuant to existing lines of credit and other outstanding debt instruments as permitted by clauses of the date of this Agreement;
(dviii) and adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (eother than the Merger) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modifypermit its corporate existence, or terminateany of the rights or franchises or any license, permit or authorization under which the business operates to be suspended, lapsed or revoked;
(ix) enter into or adopt any, or amend any material contractexisting, severance plan, agreement or commitmentarrangement or enter into or amend any Company Plan, employment, or any consulting agreement;
(iix) hire additional employees, consultants or other independent contractors or increase the compensation payable or to become payable to its directors, officers or employees (except for the hiring of new employees in the ordinary course of business consistent with past practice each of whose compensation does not exceed $80,000 per year, and increases in the ordinary course of business consistent with past practice in salaries or wages of employees of the Company who are not officers of the Company) or grant any severance or termination pay to, or enter into any joint ventureemployment or severance agreement with, lease any director or management agreement or other material agreement officer of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instrumentsCompany, or secured by any lien on any propertyestablish, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangementsadopt, in the aggregateenter into, having a value in excess of $100,000;
(h) or, except as may be required to comply with Applicable Law, amend in any material respect or take action to enhance in any material respect or accelerate any rights or benefits under, any labor, 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;
(xi) knowingly violate or knowingly fail to perform any obligation or duty imposed upon it by any applicable material federal, state or local law, rule, regulation, guideline or ordinance;
(xii) make any change to accounting policies or procedures (other than actions required to be taken by generally accepted accounting principles);
(xiii) prepare or file any Tax Return inconsistent with its past practice in preparing or filing similar Tax Returns in prior periods or, on any such Tax Return, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods;
(xiv) fail to file in a timely manner any Tax Returns (except as to filings for which a result of a change in law proper extension has been obtained) that become due or in U.S. GAAP, fail to pay any Taxes that become due;
(xv) make or rescind any express or deemed election relating to Taxes or change any of the accounting principles its methods of reporting income or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesdeductions for Tax purposes;
(ixvi) except in the Ordinary Course of Business, commence any litigation or proceeding with respect to any material Tax liability or settle or compromise any material pending Tax liability or threatened suit, action commence any other litigation or claim, proceedings or settle or compromise any other than settlements material claims or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregatelitigation;
(jxvii) except for sales of inventory in the ordinary course of business and the hiring of employees in the ordinary course of business as permitted in subsection (x), enter into, renew, terminate or amend any Material Contract; or purchase or lease any real property;
(xviii) pay, discharge or satisfy any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction satisfaction, in the Ordinary Course ordinary course of Business business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements most recent financial statements (or the notes thereto) of the Company included in the Financial Statements or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practice;
(kxix) create or form any Subsidiary or make any other investment in another Person (xother than short term investments for the purpose of cash management only);
(xx) increase modify the standard warranty terms for products sold by the Company or amend or modify any product warranties in effect as of the date hereof in any manner that is adverse to the compensation Company;
(xxi) make or authorize any new capital expenditure or expenditures that individually is in excess of $80,000 or in the aggregate are in excess of $160,000;
(xxii) allow any of the Company's Intellectual Property rights relating to the Company's existing products or products currently under development to be disclosed, other than under appropriate non-disclosure agreements, abandoned, or otherwise become unavailable to the Company on the same terms and employee benefits conditions as such rights were available to the Company as of the date of this Agreement;
(xxiii) (A) enter into any exclusive license, distribution, marketing or sales agreements; (B) enter into any commitment to any person to (1) develop software without charge, (2) incorporate any software into any of the Company's products other than pursuant to valid license agreements executed in the ordinary course of business, or (3) enter into any license, distributorship, or sales agreement that by its terms would purport to relate to any of the products of Buyer or its affiliates; (C) sell, transfer or otherwise dispose of any Intellectual Property other than sales of its products and other non-exclusive licenses that are in the ordinary course of business and consistent with past practices, or (D) grant "most favored nation" pricing to any Person;
(xxiv) allow any insurance policy relating to the Company's business to be amended or terminated without replacing such policy without a policy providing at least equal coverage, insuring comparable risks and issued by an insurance company financially comparable to the prior insurance company;
(xxv) enter into or amend any contract, agreement, commitment or arrangement with any Affiliated Person;
(xxvi) fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;
(xxvii) knowingly take any action that would result in a failure to maintain trading of the Company Common Stock on the Nasdaq National Market; or
(xxviii) authorize, propose (other than in a request to Buyer for consent pursuant to this Section 4.1(a)) or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
(b) The Company shall:
(i) maintain its assets and properties in the ordinary course of business in the manner historically maintained, reasonable wear and tear, damage by fire and other casualty excepted;
(ii) promptly repair, restore or replace all assets and properties in the ordinary course of business consistent with past practice;
(iii) upon any damage, destruction or loss to any of its directorsassets or properties, executive officers apply any and other key employeesall insurance proceeds, hire any new employees if any, received with respect thereto to the prompt repair, replacement and restoration thereof;
(other than iv) comply with all Applicable Laws;
(v) take all actions necessary to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement be in compliance with all Material Contracts and to any such employees, maintain the effectiveness of all Company Permits;
(yvi) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change notify Buyer in control agreement with or for writing of the benefit commencement of any employeeaction, suit, claim, investigation or other than like proceeding by or against the Company; and
(Avii) the establishment pay accounts payable and pursue collection of terms of employment (including compensation) of newly hired employees other than executive officers its accounts receivable in the Ordinary Course ordinary course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Codebusiness, 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;consistent with past practices.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure ScheduleThe Company covenants and agrees that, during the period from the date of this Agreement to and continuing until the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, except as contemplated by this Agreement or required by applicable law or rule of the New York Stock Exchange, unless Parent shall otherwise agree in writing (such agreement not to be unreasonably withheld, conditioned or delayed), and except as set forth in Section 5.1 of the Company shall, Disclosure Letter:
(a) the Company shall conduct its business and shall cause each the businesses of its Subsidiaries toto be conducted, in all material respects carry on only in, and the Company and its business in Subsidiaries shall not take any action except in, the regular and ordinary course andof business, to consistent with past practice; and the extent consistent therewith, Company shall use its reasonable best efforts to preserve intact the business organizations of the Company and its current business organizationSubsidiaries, keep available and to maintain (i) the services of its current officers and the present officers, employees and preserve consultants of the Company and its relationships Subsidiaries and (ii) its existing relations with customerssuppliers, suppliers creditors, business associates and others having business dealings with it. Without ; and
(b) without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall not, and shall cause each of its Subsidiaries not to, without take any of the prior written consent of Parent (which shall not be unreasonably withheld):following actions:
(ai) amend its certificate of incorporation or by-laws;
(xii) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class or any other equity interest, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other equity interest in the Company or any of its Subsidiaries (except for the issuance of shares of Company Common Stock pursuant to the exercise of Options outstanding on the date hereof);
(iii) declare, set aside aside, make or pay any dividends ondividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock or any other equity interest, including any constructive or deemed distributions, and any distribution in connection with the adoption of a shareholders rights plan, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than except that a wholly owned Subsidiary of the regular quarterly Company may declare and pay a dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, its parent;
(yiv) split, combine or reclassify any of its capital stock or any other equity interest or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or any other equity interest;
(zv) redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or any other equity interests;
(vi) (A) purchase, redeem acquire, sell, transfer, lease, license, mortgage, encumber or dispose of any material assets, other than the purchase, sale, rental and lease of vehicles in the ordinary course of business, consistent with past practice; (B) acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof; (C) sell, transfer or dispose of any Subsidiary of the Company (by merger, consolidation, sale of stock or assets or otherwise); (D) incur or assume any indebtedness for borrowed money or other liability, other than in connection with the financing of vehicles in the ordinary course of business, consistent with past practice; (E) modify, amend or terminate any confidentiality agreements, standstill agreements or Company Material Contracts to which the Company or its Subsidiaries is a party or by which it is bound, or waive, release or assign any material rights or claims, other than in the ordinary course of business, consistent with past practice; (F) assume, guarantee, endorse or otherwise acquire become liable or responsible (whether directly, contingently or otherwise) for the obligations of any shares other Person, other than in the ordinary course of business, consistent with past practice; (G) make any material loans, advances or capital stock contributions to, or investments in, any other Person (other than to its wholly owned Subsidiaries in the ordinary course of business, consistent with past practice); (H) repurchase, redeem, repay or take any other action with respect to the issued and outstanding 11% Senior Subordinated Notes of the Company due May 2009 (the “Notes”), other than pursuant to Section 5.7; or (I) other than in the ordinary course of business, consistent with past practice, enter into any material commitment, transaction, contract or agreement, including any of the following entered into outside the ordinary course of business (i) any material capital expenditure, (ii) any material contract or agreement outside the ordinary course of business, (iii) any contracts or agreements that cannot be cancelled on notice of thirty (30) days or less and (iv) any noncompete agreements or other agreements that limit the ability of the Company to conduct any line of business;
(vii) increase the compensation, severance or other benefits payable or to become payable to its directors, officers or employees, other than increases in salary or wages of employees of the Company or its Subsidiaries (who are not directors or executive officers of the Company) in accordance with past practice or pursuant to binding commitments made prior to the date hereof, or grant any severance or termination pay (except payments required to be made under the Plans or other obligations existing on the date hereof in accordance with the terms of such obligations) to, or enter into any employment or severance agreement with, any employee of the Company or any of its Subsidiaries Subsidiaries, or establish, adopt, enter into or amend any other securities thereof collective bargaining agreement, Plan, trust, fund, policy or any rights, warrants or options to acquire any such shares or other securities (except arrangement for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms benefit of any such rightscurrent or former directors, warrants officers or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of the normal, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company employees or any of its Subsidiaries iftheir beneficiaries, except, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in by law or as would not result in U.S. GAAPa material increase in the cost of maintaining such collective bargaining agreement, change any of the accounting principles Plan, trust, fund, policy or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiariesarrangement;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(jviii) pay, repurchase, discharge or satisfy any of its material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business, consistent with past practice, or pursuant to contractual requirements existing on the date hereof, of claims, liabilities or obligations reflected or reserved against against, in, or contemplated by, the Company Financial Statements consolidated financial statements (or the notes thereto) of the Company and its Subsidiaries;
(ix) take any action to change accounting policies or incurred procedures or any of its methods of reporting income, deductions or other items for income tax purposes, except as required by a change in GAAP, SEC position or applicable law occurring after the Ordinary Course date hereof;
(x) approve or authorize any action to be submitted to the stockholders of Business the Company for approval other than pursuant to this Agreement;
(xi) make or relating change any material election with respect to matters expressly permitted by clauses (d) Taxes, agree or (e)settle any material claim or assessment in respect of Taxes, or arising from agree to an extension or waiver of the limitation period to any material claim or assessment in respect of Taxes;
(xii) voluntarily take, or commit to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VI not being satisfied or make any representation or warranty of the Company contained herein that is not qualified as to materiality inaccurate in any material respect, or any representation or warranty that is qualified as to materiality untrue in any respect at, or as of any time prior to, the Effective Time, or that would materially impair the ability of the Company, Parent, PHH or Merger Sub to consummate the Transactions, including payments to advisorsthe Merger, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in accordance with the aggregate;terms hereof or materially delay such consummation; or
(kxiii) (x) increase in any manner the compensation and employee benefits of agree, authorize or announce to take any of its directors, executive officers and other key employees, hire any new employees the actions described in subsections (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, i) through (yxii) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) of the Disclosure Schedule;above.
Appears in 1 contract
Samples: Merger Agreement (PHH Corp)
Conduct of Business by the Company Pending the Merger. Except Prior to the Effective Time and except as provided in Section 7.10 or the Transition Agreement, unless Parent shall otherwise expressly contemplated agree in writing after written notice provided by this Agreement the Company specifying in reasonable detail the basis for any action by the Company or as its Subsidiaries outside the scope of agreed upon activities set forth in the Disclosure Schedulethis Section 6.1 and at Parent's election, during the period a meeting with officials from the date of this Agreement Company or its Subsidiaries, as the case may be, to discuss the earlier to occur of basis for such action:
(i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business their respective businesses in the usual, regular and ordinary course andin the same manner as heretofore conducted, to the extent consistent therewithand shall, and shall cause its Subsidiaries to, use its reasonable best their diligent efforts to preserve intact its current their present business organizationorganizations, keep available the services of its current their present officers and employees and preserve its their relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject them to the provisions of Section 7.5 end that their goodwill and Article IX, ongoing businesses shall be unimpaired at the Effective Time. The Company shall notshall, and shall cause each of its Subsidiaries to (A) maintain insurance coverages and its books, accounts and records in the usual manner consistent with prior practices; (B) comply in all material respects with all laws, ordinances and regulations of Governmental Entities applicable to the Company and its Subsidiaries; (C) maintain and keep its properties and equipment in good repair, working order and condition, ordinary wear and tear excepted; and (D) perform in all material respects its obligations under all contracts and commitments to which it is a party or by which it is bound, in each case other than where the failure to so maintain, comply or perform, either individually or in the aggregate, would not to, without reasonably be expected to result in a Company Material Adverse Effect;
(ii) the prior written consent of Parent (which Company shall not be unreasonably withheld):
and shall not propose to (aA) (x) declare, set aside sell or pay pledge or agree to sell or pledge any dividends on, or make any other actual, constructive or deemed distributions capital stock owned by it in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017Subsidiaries, (yB) amend its Third Amended Articles of Incorporation or Regulations, (C) split, combine or reclassify any of its outstanding capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock of the Company, or declare, set aside or pay any dividend or other distribution payable in cash, stock or property (other than dividends declared, set aside or paid in a manner consistent with the Company's past practice), or (zD) purchasedirectly or indirectly redeem, redeem purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of Company capital stock of stock;
(iii) the Company or shall not, nor shall it permit any of its Subsidiaries to, (A) issue, deliver or sell or agree to issue, deliver or sell any other securities thereof additional shares of, or rights of any rights, warrants or options kind to acquire any such shares or other securities (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issueof, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stockstock of any class, any other voting securities or equity equivalent or any option, rights or warrants to acquire, or securities convertible into, shares of capital stock other than issuances of Company Common Stock pursuant to the exercise of Stock Options, (B) except as provided for in the Company's capital expenditure budget for the fiscal year ending September 30, 1999 (the "Capital Expenditure Budget"), acquire, lease or any rights, warrants dispose or options agree to acquire, lease or dispose of any such shares, voting securities capital assets in excess of $1,000,000 or convertible securities or equity equivalent (any other assets other than for in the issuance ordinary course of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness)business, (yC) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (incur additional indebtedness other than in the ordinary course of business for working capital purposes or as provided for in the Capital Expenditure Budget or encumber or grant a security interest in any acceleration occurring asset in connection with the Offer such indebtedness; or the Merger pursuant (D) enter into any binding contract, agreement, commitment or arrangement with respect to the terms any of the applicable equity incentive plan or agreement governing the applicable Company Stock Option)foregoing;
(civ) amend the Company shall not, nor shall it permit any of its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereofSubsidiaries to, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity interest in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or thereof; PROVIDED, HOWEVER, that if after notice provided by the Company to Parent, Parent fails to agree to acquire any assets that have such merger, consolidation or acquisition and this Agreement is later terminated, Parent and its respective Affiliates shall be precluded from undertaking such merger, consolidation or acquisition for a value in excess period of $100,000 individually or in excess three (3) years following the date of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Companysuch termination;
(iiv) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are except as set forth in excess of requirements for customer orders;
(iii) is taken in the ordinary course Schedule 6.1 of the normalCompany Disclosure Schedule, day-to-day operations of the Company; and
(iv) does not require authorization by the Company’s board of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that isCompany shall not, is in accordance with the authority delegated to the person making the decision or taking the action.
(e) except to the extent required by contractual commitments existing on the date hereof, sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose ofnor shall it permit, any of its assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar monthSubsidiaries to, except sales of inventory or obsolete assets in the Ordinary Course of Business;
(f) as required to comply with applicable law and except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assetsprovided in Section 7.4 hereof, (iA) amend or otherwise modifyadopt, or enter into, terminate, expand the applicability of or amend any material contractbonus, agreement or commitmentprofit sharing, (ii) or enter into any joint venturecompensation, lease or management agreement severance, termination, stock option, pension, retirement, deferred compensation, employment or other material agreement of the Company or any of its Subsidiaries if, in each case, such contractBenefit Plan, agreement, commitmenttrust, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases fund or other similar instrumentsarrangement for the benefit or welfare of any director, officer or secured by any lien on any propertycurrent or former employee, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change any of the accounting principles or practices used by it materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(i) except in the Ordinary Course of Business, settle or compromise any material pending or threatened suit, action or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate;
(j) pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities reflected or reserved against in, or contemplated by, the Company Financial Statements (or the notes thereto) or incurred in the Ordinary Course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregate;
(k) (xB) increase in any manner the compensation and employee benefits or fringe benefit of any director, officer or employee (except for normal increases in the ordinary course of business that are consistent with past practice and that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company and its directors, executive officers and other key employees, hire any new employees (other than Subsidiaries relative to replace an employee whose employment has terminatedthe level in effect prior to such amendment), or (C) pay any pension or retirement allowance benefit not required by law or provided under any existing plan or agreement to any such employeesarrangement, (yD) become grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Company Benefit Plan (including, without limitation, the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any benefit plans or agreements or awards made thereunder) except in the ordinary course of business or in a party tomanner consistent with past practice, (E) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or Company Benefit Plan other than in the ordinary course of business consistent with past practice, or (F) adopt, enter into, amend or commit itself terminate any binding contract, agreement, commitment or arrangement to do any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for of the benefit of any employee, other than foregoing; and
(Avi) the establishment Company shall not, nor shall it permit any of terms of employment (including compensation) of newly hired employees other than executive officers its Subsidiaries to, make any investments in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such agreements to not be subject to Section 409A of the Codenon-investment grade securities; PROVIDED, 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); provided, howeverHOWEVER, that the Company and any of its will be permitted to create new wholly owned Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts set forth in Section 6.1(k) ordinary course of the Disclosure Schedule;business.
Appears in 1 contract
Samples: Merger Agreement (Pentair Inc)
Conduct of Business by the Company Pending the Merger. Except as otherwise expressly permitted by this Agreement, the Company will, and will cause its Subsidiaries to, from the date of this Agreement to the Closing, conduct its business in the ordinary course in substantially the same manner as presently conducted and make reasonable commercial efforts consistent with past practices to preserve its relationships with other Persons. Additionally, except as otherwise contemplated by this Agreement or as set forth in on Section 6.1(a) of the Company Disclosure Schedule, during the period from the date of this Agreement to the earlier to occur of (i) the date of the termination of this Agreement or (ii) the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its current business organization, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedules, and subject to the provisions of Section 7.5 and Article IX, the Company shall will not, and shall cause each of it will not permit its Subsidiaries not to, to do any of the following without the prior written consent of Parent (which shall not be unreasonably withheld):the Surviving Corporation:
(a) amend its governing documents;
(xb) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver any stock or stock options or other equity equivalents of any class or any other of its securities;
(c) (A) split, combine or reclassify any shares of its capital stock, (B) declare, set aside or pay any dividends ondividend or other distribution (whether in cash, stock or make property or any other actual, constructive or deemed distributions combination thereof) in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than the regular quarterly dividend of not greater than $.04 per Share payable to stockholders of record on a date no earlier than March , 2017, (yC) split, combine or reclassify any of its capital stock 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 (z) purchase, redeem or otherwise acquire any of its securities;
(d) (A) incur or assume any long-term debt or issue any debt securities or, except under existing lines of credit and in amounts not Material to it, incur or assume any short-term debt other than in the ordinary course of business, (B) other than in the ordinary course of business consistent with past practice assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, (C) make any loans, advances or capital contributions to, or investments in, any other Person, other than in the ordinary course and consistent with past practice up to an aggregate loan amount per Person of $2,500,000 in the case of loans to Persons who had a lending relationship with Company as of March 31, 2007 or $1,000,000 in the case of loans to Persons who did not have a lending relationship with Company as of Xxxxx 00, 0000, (X) pledge or otherwise encumber shares of its capital stock, or (E) mortgage or pledge any of its assets, tangible or intangible, or create or suffer to exist any Lien thereupon, other than Liens permitted by the proviso clause in the definition of Liens and Liens created or existing in the ordinary course of business consistent with past practice;
(e) except as required by Law or as contemplated herein, adopt or amend any Benefit Plan;
(f) grant to any director, officer or employee (A) any options to purchase shares of capital stock of the Company or any of its Subsidiaries (B) an increase in his or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities her compensation (except for the withholding of shares of Common Stock in connection with Taxes payable in respect of the exercise of Options);
(b) (x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or equity equivalent (other than for the issuance of shares upon the exercise of Options and for pledges of the stock of the Subsidiaries of the Company, including foreign Subsidiaries, which are required or may be required under the existing terms of borrowings or indebtedness), (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) except as contemplated by this Agreement, accelerate the vesting of any Company Stock Options (other than any acceleration occurring in connection with the Offer or the Merger pursuant to the terms of the applicable equity incentive plan or agreement governing the applicable Company Stock Option);
(c) amend its Certificate of Incorporation or By-laws or other organizational documents, or alter through merger, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any Subsidiary of the Company;
(d) except as required by contractual commitments existing on the date hereof, acquire or agree to acquire, except for purchases of raw materials, supplies, and inventory in the Ordinary Course of Business, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during any calendar month; For purposes of this Section 6.1, an action taken will be deemed to have been taken in the “Ordinary Course of Business” only if that action:
(i) is substantially consistent in nature, scope, and magnitude with the past practices of the Company;
(ii) with respect to sales of inventory, is reasonably expected to produce gross profit margins substantially consistent with gross profit margins for the last 12 months and, if sales involve a new customer, are fully credit insured and with respect to purchases of raw materials and inventory, is substantially consistent with purchase levels during the last 12 months if such purchases are in excess of requirements for customer orders;
(iii) is taken in the ordinary course of business consistent with past practice), or, except as otherwise contemplated herein, pay or agree to pay to any such person other than in the normalordinary course of business consistent with past practice any bonus, day-to-day operations severance or termination payment, specifically including any such payment that becomes payable upon the termination of such person by it or the Company; andSurviving Corporation after the Closing;
(ivg) does not require authorization by except as otherwise contemplated herein, enter into or amend any employment Contract (including any termination agreement), except that any automatic renewals contained in currently existing contracts and agreements shall be allowed and compensation payable under employment Contracts may be increased in the Company’s board ordinary course of directors (or committee of the board of directors) and does not require any other separate or special authorization of any nature (that is, is in accordance business consistent with the authority delegated to the person making the decision or taking the action.past practice;
(eh) except to the extent required by contractual commitments existing on the date hereofacquire, sell, lease or otherwise dispose ofof any assets outside the ordinary course of business, or agree to sell, lease or otherwise dispose of, any of its other assets that have a value in excess of $100,000 individually or in excess of $500,000 in the aggregate during are Material to it, or acquire any calendar monthPerson (or division thereof), except sales any equity interest therein or the assets thereof outside the ordinary course of inventory or obsolete assets in the Ordinary Course of Businessbusiness;
(f) except as permitted by clauses (d) and (e) above with respect to raw materials, inventory, supplies and obsolete assets, (i) amend change or otherwise modify, or terminate, any material contract, agreement or commitment, (ii) or enter into any joint venture, lease or management agreement or other material agreement of the Company or any of its Subsidiaries if, in each case, such contract, agreement, commitment, venture, lease or management agreement involves or could reasonably be expected to involve the receipt or payment by the Company or any of its Subsidiaries of $100,000 per month individually and $500,000 per month in the aggregate (except for hedging arrangements in the Ordinary Course of Business);
(g) (x) except as contemplated by Section 7.11 hereof or for borrowings incurred in the Ordinary Course of Business (including drawdowns as permitted by the Credit Agreement) and for hedging arrangement substantially consistent with past practice, incur any additional indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of credit or similar credit transaction) in a single transaction or a group of related transactions or engage in any other financing arrangements, in the aggregate, having a value in excess of $100,000;
(h) except as may be required as a result of a change in law or in U.S. GAAP, change modify any of the accounting principles or practices used by it materially affecting the reported consolidated or revalue in any Material respect any of its assets, liabilities including without limitation writing down the value of inventory or results writing off notes or accounts receivable other than in the ordinary course of operations of the Company and its Subsidiariesbusiness consistent with past practices or as required by GAAP or any Regulatory Authority;
(iA) except as otherwise contemplated herein, enter into, cancel or modify any Contract (other than loans, advances, capital contributions or investments permitted by sub clause (iv)(C) of this Section 6.1(a) other than in the Ordinary Course ordinary course of Businessbusiness consistent with past practices, settle but not in any event involving an amount in excess of $20,000; (B) authorize or compromise make any material pending capital expenditure or threatened suitexpenditures that, action individually or claim, other than settlements or compromises requiring payments by the Company or any of its Subsidiaries of no more than $100,000 individually and $500,000 per month in the aggregate, are in excess of $25,000; or (C) enter into or amend any Contract with respect to any of the foregoing;
(jk) pay, discharge or satisfy satisfy, cancel, waive or modify any material claims, liabilities or obligationsobligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the Ordinary Course ordinary course of Business business of liabilities reflected or reserved against in, in or contemplated by, by the Company Financial Statements (or the notes thereto) Statements, or incurred in the Ordinary Course ordinary course of Business or relating to matters expressly permitted by clauses (d) or (e), or arising from the Transactions, including payments to advisors, and except for payments, discharges and satisfaction of no more than $100,000 individually and $500,000 per month in the aggregatebusiness consistent with past practices;
(kl) settle or compromise any pending or threatened suit, action or claim in excess of $25,000;
(xm) increase merge, combine or consolidate with another Person;
(n) make any material change in its accounting or tax policies or procedures, except as required by applicable Law or to comply with GAAP;
(o) take, or agree in writing or otherwise to take, any action that would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect or result in any manner the compensation and employee benefits of any of its directors, executive officers and other key employees, hire any new employees (other than to replace an employee whose employment has terminated), or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such employees, (y) become a party to, amend or commit itself to any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment, severance or change in control agreement with or for the benefit of any employee, other than (A) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the Ordinary Course of Business and (B) amendments to employment agreements required to cause such 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); provided, however, that the Company and any of its Subsidiaries may pay cash bonuses and other cash incentive compensation in respect of calendar year 2016 to the Persons and in the amounts conditions set forth in Section 6.1(kthis Agreement not being satisfied; or
(p) agree, whether in writing or otherwise, to do any of the Disclosure Schedule;foregoing.
Appears in 1 contract
