Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to the earlier of the termination of this Agreement pursuant to Article 9 or the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter): (a) The Company and the Company Subsidiaries shall (i) conduct their business only in the ordinary and usual course of business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time. (b) Without limiting the generality of the foregoing Section 5.1(a), the Company shall not, and shall not permit any of the Company Subsidiaries to, do any of the following: (i) other than in ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole; (ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof; (iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents; (iv) 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; (v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options; (vi) split, combine, subdivide or reclassify any capital stock; (vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement; (viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries; (ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan. (x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency; (xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements; (xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent; (xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate; (xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations; (xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice; (xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives; (xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement; (xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business; (xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or (xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Samples: Merger Agreement (Lasercard Corp)
Conduct of Business by the Company Pending the Merger. The Company covenants During the period from and agrees that, prior after the date of this Agreement to the earlier of the Effective Time or the termination of this Agreement pursuant to Article 9 or the Effective TimeSection 8.01, unless (xa) otherwise required, contemplated or permitted by this Agreement, (b) set forth on Section 5.01 of the Disclosure Schedule, (c) required by applicable Law or Nasdaq rule or (d) Parent gives its written consent, which consent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed conditioned or conditioned)delayed, (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
(a) The Company shall, and shall cause its subsidiaries to conduct the Company Subsidiaries shall Company’s business in all material respects in the ordinary course consistent with past practice, and use commercially reasonable efforts to (i) conduct their preserve in all material respects its present relationships with each of its customers, suppliers, and other persons with whom the Company has material business only in the ordinary and usual course of business and consistent with past practicesrelations, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business satisfactory relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain keep available the services of their present the Company’s current officers and key employees other Key Employees, and to comply (iii) preserve in all material respects its present relationships with Governmental Authorities and maintain in effect all applicable Laws and the requirements of all Contracts material Healthcare Permits that are material required for the Company or its subsidiaries to carry on their respective businesses as currently conducted. During the period from the date of this Agreement to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at earlier of the Effective Time.
(b) Without limiting Time or the generality termination of the foregoing this Agreement pursuant to Section 5.1(a)8.01, the Company shall not, and shall not permit any of its subsidiaries to, unless (A) otherwise required, contemplated or permitted by this Agreement (including to the extent required to comply with the Company’s obligations in the immediately preceding sentence), (B) forth on Section 5.01 of the Disclosure Schedule, (C) required by applicable Law or Nasdaq rule or (D) Parent gives its written consent, which consent shall not be unreasonably withheld, conditioned or delayed:
(a) amend the Company Subsidiaries toOrganizational Documents;
(b) issue, do deliver, grant, sell, lease, sell and leaseback, pledge, license, transfer, mortgage, encumber, dispose of or otherwise subject to any Lien (other than any Permitted Lien) (i) any Company Securities or Subsidiary Securities (except for the issuance or transfer and delivery of shares of Company Common Stock issuable or transferable in accordance with the terms of the Company Options or shares of Company Restricted Stock or upon conversion of the Company Convertible Notes, in each case outstanding as of the date of this Agreement, which were granted under the Equity Compensation Plan, to the extent accounted for under the Equity Compensation Plan), or (ii) any material property or assets, whether tangible or intangible, of the Company or any of its subsidiaries, in each case, other than (A) in the ordinary course of business and in a manner consistent with past practice, (B) pursuant to Contracts in existence on the date of this Agreement or (C) dispositions of equipment and property no longer used in the operation of the business;
(c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock or other equity interests, property or otherwise, with respect to any of the following:Company’s or its subsidiaries’ capital stock (except dividends or other distributions paid by any direct or indirect subsidiary to the Company or to any direct or indirect wholly-owned subsidiary of the Company);
(d) reclassify, adjust, combine, split, subdivide or redeem, purchase or otherwise acquire, any Company Securities or Subsidiary Securities, except for purchases of Company Securities or Subsidiary Securities pursuant to any Company Plan and the agreements underlying awards of Company Securities or Subsidiary Securities pursuant to such Company Plans;
(e) incur, assume, redeem, repurchase, prepay, defease, cancel or otherwise acquire, or modify the terms of, any Indebtedness or authorize, issue, deliver, grant or sell any notes, bonds, debentures or other securities in respect of Indebtedness or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the Indebtedness of any other person, except for (i) other than borrowings under the Company’s current credit facilities in the ordinary course of business consistent with past practice, purchase (ii) Indebtedness of up to $100,000 in the aggregate with respect to capitalized lease obligations, and (iii) Indebtedness solely between or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of among the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholeany of its subsidiaries;
(iif) acquire by merging make any loans, advance or consolidating with capital contributions to, or by purchasing all or investments in, any other person (other than a substantial equity interest in or a substantial portion subsidiary of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereofCompany);
(iiig) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former enter into, amend or current employees and directors of the Company modify in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units any material respect, terminate, cancel or (ii) the cashless renew any Material Contract or net exercise of Options;
(vi) splitContract that, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan if in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer orhereof would have been a Material Contract, other than in the ordinary course of business consistent with past practice, nonor (ii) assign or waive any material term or rights, claims, benefits or default under, or release, settle or compromise any material claim against the Company or material liabilities or obligation owing to the Company under, any Material Contract, other than in the ordinary course consistent with past practice;
(h) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) in one transaction or any series of related transactions, except in the ordinary course of business in a manner consistent with past practice or in respect of capital expenditures as contemplated by the budget set forth on Section 5.01(i) of the Disclosure Schedule, (i) any assets or (ii) any equity interests in any person or any business or division of any person or all or substantially all of the assets of any person (or business or division thereof), in the case of the foregoing clauses (i) and (ii), except to the extent (A) otherwise obligated pursuant to any agreement as of the date hereof, a copy of which has previously been made available to Parent, or (B) solely among or between the Company and its wholly-officer employeeowned subsidiaries;
(i) authorize, agent incur or make any capital expenditures that exceed the aggregate amount of expenditures budgeted in the Company’s current capital expenditure plan set forth on Section 5.01(i) of the Disclosure Schedule;
(j) except to the extent required under applicable Law, this Agreement or existing Company Plans as in effect on the date of this Agreement, (i) increase in any respect, or accelerate the payment of, the compensation, bonus, bonus opportunity or fringe benefits of any Company Employee except in the ordinary course of business in a manner consistent with past practice, (ii) make or grant, or accelerate the payment of, any retention, severance or termination pay not currently required to be paid under existing Company Plans to, or enter into, or amend, any employment, consulting or severance Contract with, any present or former Company Employee; (iii) enter into, adopt, amend or terminate any Company Plan; or (iv) enter into any employment, consulting, change of control or severance Contract with any newly hired employee or consultant;
(k) implement, adopt or make any change to the accounting methods used by it materially affecting its assets, liabilities or business, except for such changes that are required by GAAP or Regulation S-X promulgated under the Exchange Act or as otherwise specifically disclosed in the Company Reports, each as concurred with by the Company’s independent registered public accountants;
(i) make, change or rescind any Tax election or Tax accounting method, except as required by applicable Law; (ii) fail to file material Tax Returns and other documents required to be filed with any Governmental Authority, subject to timely extensions permitted by applicable Law; (iii) extend the statute of limitations with respect to any Tax; (iv) file any amended Tax Return reflecting a material amount of income Taxes; or (v) settle or compromise any material federal, state, local or foreign Tax liability;
(m) waive, release, assign, settle or compromise any pending or threatened Action that is material, that relates to the transactions contemplated hereby or that is brought by any current, former or purported holder of any securities of the Company or its subsidiaries in such capacity;
(n) amend or modify the Company’s engagement letter with the Financial Advisor in a manner that increases the fee or commission payable by the Company;
(o) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries (other than the Merger);
(p) announce, implement or effect any material reduction in labor force, lay-off, early retirement program, group severance program or other program or effort concerning the termination of employment of Company Subsidiary, Employees other than routine employee terminations;
(Eq) adopt or establish any new employee benefit plan or amend revalue in any material respect any existing employee benefit planof its material assets, except as necessary to maintain Tax-qualified status including writing down the value of inventory or Tax-favored treatmentwriting down notes or accounts receivable, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xii) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors (ii) as required by GAAP or other transaction costs related to this Agreement and Regulation S-X promulgated under the transactions contemplated hereunder substantially Exchange Act, (iii) or as previously otherwise specifically disclosed to Parentin the Company Reports;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviiir) fail to use commercially reasonable efforts to keep maintain in full force and effect all material (i) insurance policies maintained by covering the Company and its subsidiaries and their respective properties, assets and businesses and (ii) insurance policies covering all managed entities for which the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes is required to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) obtain and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiarymaintain insurance, in each of (A) a form and (B) in the ordinary course of businessamount consistent with prudent industry practice; or
(xxs) agree take, agree, resolve or commit to take any of the actions precluded by described in Section 5.1(b5.01(a) through Section 5.01(r). Notwithstanding the foregoing (but without limiting any of the foregoing), nothing in this Agreement is intended Section 5.01 shall be construed to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of prohibit the Company or any of its subsidiaries from engaging in any act which the Company Subsidiaries at any time prior or its applicable subsidiary reasonably believes is necessary for patient safety needs or to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent comply with the terms and conditions requirements of this Agreement, complete control and supervision over their own business and operationsany Governmental Authority.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, Except (a) with the prior to the earlier written consent of the termination of this Agreement pursuant to Article 9 or the Effective Time, unless Parent (x) Parent which consent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (yb) otherwise as required by applicable Law, (c) as expressly contemplated by this Agreement or (zd) expressly permitted or required pursuant to this Agreement (including as otherwise set forth in Section 5.1 of the Company Disclosure Letter):
, during the period from the date hereof until the Effective Time (aor such earlier date on which this Agreement may be terminated) The Company and the Company shall, and shall cause each of its Subsidiaries shall (i) conduct their to, carry on its business only in all material respects in the ordinary and usual course of business and consistent with past practicespractice. To the extent consistent with the foregoing and except as otherwise consented to in writing by Parent (which consent shall not be unreasonably withheld, (ii) delayed or conditioned), the Company and its Subsidiaries shall use their respective reasonable best efforts to preserve their assets and properties in good repair and condition, preserve their business organizations intact, maintain existing relations and preserve substantially intact their respective business organizationsgoodwill with Governmental Entities, to maintain their significant beneficial business relationships with suppliers, contractors, distributorsalliances, customers, licensorssuppliers, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws business associates and manage its working capital (including the timing of collection of accounts receivable, the payment of accounts payable and the requirements management of all Contracts that are material to inventory) in the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing ordinary course of business shall be unimpaired at the Effective Time.
(b) consistent with past practice. Without limiting the generality of the foregoing foregoing, and except as (i) required by applicable Law, (ii) expressly contemplated by this Agreement, or (iii) otherwise set forth in Section 5.1(a)5.1 of the Company Disclosure Letter, during such period, the Company shall not, and shall not permit any of the Company its Subsidiaries to, do any without the prior written consent of the following:Parent (which consent shall not be unreasonably withheld, delayed or conditioned):
(a) (i) other than in ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside or pay any dividend dividends on, or make other distribution payable distributions in cashrespect of, capital stock, property or otherwise with respect to any shares of its capital stock;
(v) purchase, redeem stock 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 (i) the relinquishment of shares except for dividends by former or current employees and directors a wholly-owned Subsidiary of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units to its parent or (ii) other than in the cashless or net exercise case of Options;
(vi) wholly-owned Subsidiaries, split, combine, subdivide combine or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of, of or in substitution for any class shares of its capital stockstock or equity interests or redeem, purchase or otherwise acquire or offer to redeem any of its capital stock or equity interests.
(b) authorize for issuance, issue, deliver, sell, pledge, grant, transfer or otherwise encumber any shares of its capital stock or equity interests, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares or interests, voting securities or convertible securities, other than (i) the issuance of Shares pursuant to Company Stock Options and Company RSUs outstanding as of the date hereof previously issued under the Company Stock Incentive Plans, and (ii) the issuance of any shares of capital stock or equity interests to the Company or any wholly-owned Subsidiary of the Company;
(c) amend the certificate of incorporation or bylaws of the Company or other similar organizational documents of any of its Subsidiaries;
(d) other than transactions that would be permissible under clause (e) below, acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to so acquire any entity, business or assets that constitute a business or division of any Person, or all or a substantial portion of the assets of any Person (or business or division thereof), in each case, for consideration in excess of $1,000,000 individually or $2,000,000 in the aggregate;
(e) make or agree to make any capital expenditure in an amount that, individually or in the aggregate, exceeds $2,000,000;
(f) other than in the ordinary course of business, transfer, assign, sell, lease, license, encumber or otherwise dispose of (by merger, consolidation, sale of stock or assets or otherwise), or agree to transfer, assign, sell, lease, license, encumber or otherwise dispose of, any entity, business or assets having a current value in excess of $1,000,000 in the aggregate;
(g) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantee thereof in excess of $2,000,000 in the aggregate, other than under any Material Contract listed in Section 3.16(b)(ii) of the Company Disclosure Letter;
(h) other than in the ordinary course of business, enter into, amend, modify or terminate, or grant any waiver under, any Material Contract or any Contract that would constitute a Material Contract if entered into prior to the date hereof;
(i) enter into, amend, modify or terminate, or grant any waiver under, any Related Party Transaction;
(j) other than in the ordinary course of business, make any loans, advances or capital contributions to, or investments in, any other Person (other than the Company or any Subsidiary of the Company) in excess of $2,000,000 in the aggregate;
(k) except as may be required by GAAP or applicable Law, make any change in its principles, practices, procedures and methods of financial or Tax accounting;
(l) merge or consolidate the Company or any of its Subsidiaries with and into any other Person, other than, in the case of any Subsidiary of the Company, to effect any acquisition permitted by clause (d) or any disposition permitted by clause (f) and other than transactions among Subsidiaries;
(m) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;
(n) settle, release, waive or compromise any pending or threatened suit, action, claim, arbitration, mediation, inquiry, proceeding or investigation of or against the Company or any of its Subsidiaries (i) requiring payment by the Company of an amount in excess of $2,000,000 in the aggregate, (ii) entailing the incurrence of any obligation or liability of the Company in excess of such amount, including costs or revenue reductions or obligations that would impose any material restrictions on the business or operations of the Company or its Subsidiaries, or (iii) that imposes any non-monetary relief;
(o) enter into any Contract or other binding obligation of the Company or any of its Subsidiaries containing (i) any restriction on the ability of the Company or any of its Subsidiaries to conduct its business as it is presently being conducted or currently contemplated to be conducted after the Merger, (ii) any provisions granting “most favored nation” status, or (iii) any restriction on the Company and its Subsidiaries engaging in any type of activity or business;
(p) permit any insurance policy naming the Company or any of its Subsidiaries as a beneficiary or a loss payable payee to lapse, be canceled or expire unless a new policy with substantially identical coverage is in effect as of the date of the lapse, cancellation or expiration;
(q) enter into or amend any employment, severance, retention, incentive or special pay agreement or arrangement with any employees of the Company or its Subsidiaries, except as required (i) pursuant to applicable Law or (ii) pursuant to contractual arrangements in effect as of the date of this Agreement;
(viiir) incur any indebtedness for borrowed money (other than trade payablesi) or guarantee any increase the compensation (including contingent compensation entitlements, such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities as severance pay) of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current or former director, officer, employee, agent employee or consultant of the Company or any Company SubsidiarySubsidiaries, other than severance and termination pay to except (A) as expressly required under any Benefit Plan or (B) for increases in base salary for non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than employees in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (Eii) adopt or establish any new employee benefit plan or amend in any material respect arrangement or amend, modify or terminate any existing employee Benefit Plan, in each case for the benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide of any material benefit to a current or former director, officer, employee, agent employee or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methodsSubsidiary, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; qualification requirements, (iii) make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right new equity awards to any extension director, officer, employee or consultant of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiaryof its Subsidiaries, (iv) take any action to accelerate the vesting or payment, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged fund or in any geographic area material to their respective business and operations;
(xv) enter into other way secure the payment, compensation or benefits under, any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material Benefit Plan to the Company and extent not required by the Company Subsidiaries (taken terms of this Agreement or such Benefit Plan as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of effect on the date of this Agreement, or (v) enter into any collective bargaining agreements;
(xviiii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment Tax election or take any position on a Tax Return filed on or after the date of this Agreement or adopt any method therein that is inconsistent with elections made, positions taken or methods used in preparing or filing similar returns in prior periods, (by contribution ii) enter into any settlement or compromise of capitalany Tax liability, property transfers(iii) file any amended Tax Return that would result in a change in Tax liability, purchase of securities taxable income or otherwiseloss, (iv) inchange any annual Tax accounting period, or loan or advance to, (v) enter into any Person, other than (A) travel and similar advances closing agreement relating to its employeesany Tax liability, or (Bvi) give or request any waiver of a statute of limitation with respect to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessany Tax Return; or
(xxt) authorize, agree or commit to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Samples: Merger Agreement (Aly Nauman A)
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to (a) Between the earlier of the termination date of this Agreement pursuant to Article 9 or and the Effective Time, unless (xexcept as set forth in SECTION 6.01(a) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
(a) The Company and Letter or as specifically required by another provision of this Agreement, the Company Subsidiaries shall, and shall cause each Subsidiary to, (i) conduct their its business only in in, and not take any action except in, the ordinary and usual course of business business; and consistent with past practices, (ii) use their respective its reasonable best efforts to maintain and preserve substantially intact their respective the business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services organization of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a wholeto keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries, and to preserve, in each caseall material respects, to the end that their good will current relationships of the Company and ongoing the Subsidiaries with customers, franchisees, licensees, suppliers and other persons with which the Company or any Subsidiary has business shall be unimpaired at the Effective Timerelations.
(b) Without limiting the generality foregoing, except as required by this Agreement or as disclosed in SECTION 6.01(b) of the foregoing Section 5.1(a)Company Disclosure Letter, neither the Company shall notnor any Subsidiary shall, between the date of this Agreement and shall not permit the Effective Time, directly or indirectly, do or agree to do, any of the Company Subsidiaries to, do any following without the prior written consent of the followingParent:
(i) other than in ordinary course make, revoke or change any Tax election, change any method of business consistent with past practiceTax accounting, purchase settle, compromise or otherwise acquireincur any liability for Taxes, sellfail to timely file any Tax Return that is due, leasefile any amended Tax Return or claim for refund, transfer surrender any right to claim a Tax refund, or dispose of consent to any extension or encumber any assets, rights or securities waiver of the Company and the Company Subsidiaries that are material statute of limitations period applicable to the Company and the Company Subsidiaries taken as a wholeany Tax claim or assessment;
(ii) acquire change the accounting principles used by merging it unless required by a change in GAAP or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereofGovernmental Authority;
(iiiA) amend or propose to amend the Company Charter Documents or, except for short-term borrowings incurred in the case ordinary course of business under the existing credit facility, incur or guarantee indebtedness for borrowed money or commit to borrow money, (B) guarantee any indebtedness of another person, (C) enter into any "keep well" or other contract to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the Company Subsidiariesforegoing, their respective Subsidiary Documentsor (D) make any loans or cancel, release or assign any indebtedness to any person;
(iv) make any capital expenditure in excess of $1,200,000 in the aggregate;
(v) subject to clause (xi), acquire, lease or license from any person (by merger, consolidation, acquisition of stock or assets or otherwise) or sell, lease, license, dispose or effect an Encumbrance (by merger, consolidation, sale of stock or assets or otherwise), of any assets other than inventory in the ordinary course of business;
(vi) change any compensation arrangement or contract with any present or former Employee (except for increases in the base salaries of employees other than officers or senior managers in the ordinary course of business), officer, director, consultant, stockholder or other service provider of the Company or any Subsidiary or grant any severance or termination or change in control pay to any such present or former Employee, officer, director, consultant, stockholder or other service provider or increase any benefits payable under any severance or termination or change in control pay policies or establish, amend or terminate any Plan or increase benefits made or proposed to be made under such Plan, except as required by applicable Law or grant any Company Stock Awards or other awards under any Company Stock Award plan, other than (A) required pursuant to the terms of any Plan as in effect on the date of this Agreement or (B) required by Law;
(vii) declare, set aside or pay any dividend or make any other distribution payable in cash, capital stock, property or otherwise with respect to Equity Interests of the Company or any shares of its capital stockSubsidiary, or otherwise make any payments to stockholders in their capacity as such, other than dividends declared or paid by any Subsidiary to any other wholly owned Subsidiary or to the Company;
(vviii) purchaseeffect a "plant closing" or "mass layoff," as those terms are defined in the Worker Adjustment and Retraining Notification Act;
(i) except as otherwise required pursuant to an existing contract set forth on SECTION 4.03(a) of the Company Disclosure Schedule, redeem issue, deliver, sell, pledge, transfer, convey, dispose or permit the imposition of an Encumbrance on any Equity Interests, or any options, warrants, securities exercisable, exchangeable or convertible into or other rights award, unit or contracts of any kind relating to any Equity Interest or any Right or Voting Debt other than the issuance of Shares upon the exercise of Company Stock Awards outstanding as of the date of this Agreement, (ii) redeem, purchase or otherwise acquire, or offer propose to purchaseredeem, redeem purchase 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units outstanding Equity Interests or (ii) the cashless or net exercise of Options;
(viiii) split, combine, subdivide or reclassify any capital stockEquity Interests;
(viix) except for enter into any contract (i) with an Affiliate, (ii) other than in the issuance ordinary course of Shares upon business, (iii) that would have been set forth on SECTION 4.14(a) of the exercise or conversion of Options outstanding Company Disclosure Letter if in effect on the date of this Agreement or upon exercise (iv) that amends, extends or terminates any of the Topcontracts set forth on SECTION 4.14(a) of the Company Disclosure Letter;
(xi) enter into any contract providing for the sale of Intellectual Property;
(xii) subject to SECTION 7.03, modify, amend or terminate, or waive, release or assign any material rights or claims with respect to any confidentiality agreement or non-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior competition agreement or standstill contracts that relate to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition by a business combination involving the Company or any of the Company Subsidiaries, of, any shares of, or any options, warrants, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ixxiii) take any action to render inapplicable, or to exempt any third party from, any Takeover Law or state Law that purports to limit or restrict business combinations or the ability to acquire or vote shares;
(xiv) lease, license, mortgage, hypothecate, pledge, sell, sublease, grant any material Encumbrance affecting and/or transfer any interest on any Owned Real Property or Leased Real Property, or enter into any amendment, extension or termination of any leasehold interest in any Leased Real Property or create any new leasehold interest in any Leased Real Property;
(xv) except as required by Law set forth in SECTION 7.03, take any action that is intended or would reasonably be expected to result in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company conditions to the Merger set forth in ARTICLE VIII not being satisfied;
(xvi) make any acquisition of, capital contributions to, or investment in, assets or stock of any person (other than any wholly owned Subsidiary) (whether by way of merger, consolidation, tender offer, share exchange or other activity);
(xvii) merge or consolidate with any person (other than mergers among wholly owned Subsidiaries;
(xviii) establish, adopt, enter into or materially amend any collective bargaining contract;
(xix) waive, release, assign, settle or compromise any material claims, or any Company Subsidiarymaterial litigation or arbitration;
(xx) satisfy, other than severance and termination pay to discharge, waive or settle any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer orliabilities, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencybusiness;
(xixxi) settle, compromise or otherwise resolve any litigation or other legal proceedings material fail to the Company maintain in full force and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate effect or fail to exercise any right use commercially reasonable efforts to replace or renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an insurance policies existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviiixxii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained amend the certificate of incorporation or by-laws of the Company;
(xxiii) do any other thing that would have required disclosure under SECTION 4.08; or
(xxiv) enter into any contract by the Company or any of the Subsidiaries to do any of the foregoing. Notwithstanding the foregoing, Parent and Merger Sub acknowledge that the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made may enter into licenses in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (business on terms determined in good faith by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to be fair and reasonable to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operationsCompany.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to From the earlier of the termination of this Agreement pursuant to Article 9 or date hereof until the Effective Time, unless (x) Parent AFI shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Lawwriting, or (z) expressly permitted or required pursuant to this Agreement (including except as set forth in Section 5.1 6.1 of the Company Disclosure Letter):
(a) The Letter or as otherwise expressly permitted by or provided for in this Agreement, the Company shall, and shall cause each of the Company Subsidiaries shall (i) to, conduct their its business only in the ordinary and usual course of business and consistent with past practices, (ii) practice and shall use their respective all reasonable best efforts to maintain preserve intact its business organization and preserve substantially intact their respective business organizations, to maintain their significant beneficial business goodwill and relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business third parties (including its relationships with thempolicyholders, insureds, agents, underwriters, brokers and investment advisory clients and customers) and to retain keep available the services of their present officers and its current key employees and to comply in all material respects with all applicable Laws maintain its current rights and the requirements of all Contracts that are material franchises, subject to the Company terms of this Agreement. In addition to and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.
(b) Without without limiting the generality of the foregoing foregoing, except as expressly set forth in Section 5.1(a)6.1 of the Company Disclosure Letter or as otherwise expressly permitted by or provided for in this Agreement, from the date hereof until the Effective Time, without the prior written consent of AFI:
(a) the Company shall not adopt or propose, and shall not permit any Company Subsidiary to adopt or propose, any change in its Constituent Documents;
(b) subject to Section 6.2, the Company shall not, and shall not permit any Company Subsidiary that is not wholly-owned, to declare, set aside or pay any shareholder dividend or other distribution (whether in cash, stock or property);
(c) the Company shall not, and shall not permit any Company Subsidiary to (i) merge or consolidate with any other Person, except that a Company Subsidiary with no material assets may merge with another Company Subsidiary, (ii) acquire a material amount of the assets or equity of any other Person, or (iii) other than in the ordinary course of business consistent with past practice or as set forth in the Company’s capital budget, a copy of which was delivered to AFI prior to the date hereof, make or commit to make any capital expenditure;
(d) the Company shall not, and shall not permit any Company Subsidiary to, sell, lease, sub-lease, license, subject to an Encumbrance, other than a Permitted Encumbrance, or otherwise surrender, relinquish or dispose of (i) the Company’s leasehold interest in its corporate headquarters at 1000 Xxxxxxxx, Xxx Xxxx (or any portion thereof), New York, or the Company’s leasehold interest in 100-000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx (xx any portion thereof), (ii) any other material facility owned or leased by the Company or any Company Subsidiary or (iii) any assets or property of the Company or any Company Subsidiary (other than sales of Company Investments owned by the Company or any of the Company Insurance Subsidiaries in accordance with Section 6.1(e) or sales of investment securities by the Company or any of the Company Subsidiaries to, do any of in the following:
(i) other than in ordinary course of business consistent with past practice) except (x) with respect to clause (iii), purchase pursuant to existing written contracts or otherwise acquirecommitments (the terms of which have been disclosed in writing to AFI prior to the date hereof), sellor (y) with respect to clauses (ii) and (iii), leasein an amount not in excess of $4,000,000 individually or $16,000,000 in the aggregate;
(e) the Company shall not, transfer or dispose of or encumber and shall not permit any assetsCompany Insurance Subsidiary to, rights or securities conduct transactions in Company Investments except in compliance in all material respects with the investment policy of the Company and Insurance Subsidiaries, in effect on the Company Subsidiaries that are material date hereof, a copy of which has previously been delivered to the Company and the Company Subsidiaries taken as a wholeAFI;
(iif) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents orshall not, in the case of the and shall not permit any Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company Subsidiaries, of, any shares of, of its capital stock or other securities (including any options, warrants, calls, commitments or rights of any kind warrants or any other agreements of any character to acquire any shares ofsimilar security exercisable or exchangeable for, or convertible into, such capital stock or similar security), or split, combine or reclassify any securities convertible into or exchangeable for any shares of, of its capital stock or authorize the issuance of or issue securities (including options, warrants or any classsimilar security exercisable or exchangeable for, or any voting securities convertible into, such capital stock or equity interests or any other securities similar security) in respect of, in lieu of, or in substitution for any class of for, its capital stock, outstanding on or take any action that, if such action had been taken prior to the date hereof, would have caused the representation and warranty made in Section 5.1.3(b) hereof to be untrue in any material respect or enter into any amendment of this Agreement;
(viii) incur any indebtedness for borrowed money material term of any of its outstanding securities (other than trade payablesissuances of Common Stock (and the associated Rights) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities in respect of the Company or any Company Subsidiaries;
(ixA) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect Options outstanding on the date hereof, (AB) the Warrants and (C) upon the exercise of Rights and issuances of Series A Preferred Stock upon the exercise of Rights), (ii) incur, guarantee or assume any indebtedness, except short-term borrowings in the ordinary course of business consistent with past practice, (iii) except as required by Applicable Law, amend or otherwise increase, accelerate the payment or vesting of the amounts payable or to become payable under, or fail to make any required contribution to, any Company Benefit Plan, (iv) except as required by Applicable Law, establish any Company Benefit Plan or (v) accelerate the vesting of any Options or Restricted Shares;
(g) except as required by Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to, grant any increase in (i) the compensation of directors, officers, employees, consultants, registered representatives or increase any severance or termination pay to any current director, officer, employee, agent or consultant agents of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant increases in the ordinary course of business consistent with past practice for employees who are not party to a contract with the Company or a Company Subsidiary that provides benefits contingent (in whole or in part) upon a change in control of the Company (other than a contract relating solely to Options) or (ii) the benefits of directors, officers, employees, consultants or agents of the Company or any Company Subsidiary;
(h) except as required by Applicable Law, the Company shall not, and shall not permit any Company Subsidiary to, (i) enter into or amend or modify any severance, consulting, retention or employment agreement (except with respect to agreements which are terminable at will by the Company or a Company Subsidiary before and after the Effective Time without any penalty or cost to the Company, such Company Subsidiary or any Affiliate thereof) or (ii) except in the ordinary course of business consistent with past practice, (B) execute hire or terminate the employment or contractual relationship of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, consultant, registered representative or agent or consultant of the Company or any Company Subsidiary, as the case may be, other than at-will employment arrangements entered into any such termination as a result of which the maximum amount paid and payable by the Company or such Company Subsidiary, as the case may be, in respect of applicable severance or similar benefits shall not exceed $1,000,000 in any one case, or $5,000,000 in the ordinary course aggregate with respect to all such terminations;
(i) the Company shall not change any method of business and consistent with past practice that are terminable at will and without material liability to accounting or accounting principles or practices by the Company or any Company Subsidiary, except for any such change required by a change in U.S. GAAP or the applicable Statutory Accounting Practices as agreed by PwC, the Company’s independent auditors;
(Cj) increase the benefits payable under Company shall not, and shall not permit any existing severanceCompany Subsidiary to, termination pay policies pay, discharge, settle or employment agreementssatisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), in each case, other than (i) settlement of policy claims or other payments, discharges, settlements or satisfactions in the ordinary course of business consistent with past practice, (Dii) increase settlements of litigation that do not exceed the compensationcase reserve established for such litigation on the litigation schedule previously delivered by the Company to AFI, bonus or other benefits plus an additional $10,000,000 in the aggregate for all such settlements and the settlement of any current directorother litigation not set forth on such litigation schedule (other than any litigation subject to Section 7.17), executive officer or(iii) payment of indebtedness, debt securities, guarantees, loans, advances and capital contributions made in the ordinary course of business consistent with past practice but not in excess of $2,000,000 individually or $10,000,000 in the aggregate or (iv) payment of principal and interest on outstanding indebtedness, as and when the same becomes due and payable;
(k) except as would not individually or in the aggregate, reasonably be expected to result in a cost to the Company that exceeds $10,000,000 plus the amount of any reserve established with respect to the following on the Company Financial Statements most recently filed with the SEC prior to the date hereof, the Company shall not, and shall not permit any Company Subsidiary to, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(xi) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change express or deemed election relating to its method of reporting incomeTaxes, deductions, or other Tax items for Tax purposes; (ii) settle or compromise any material Tax liability claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, (iii) make a request for a written ruling of a Taxing Authority relating to Taxes, other than any request for a determination concerning qualified status of any Company Benefit Plan intended to be qualified under Code Section 401(a), (iv) enter into a written and legally binding agreement with a Taxing Authority relating to Taxes, or (v) except as required by Applicable Law, change any transaction with an Affiliate outside of its methods of reporting income or deductions for federal income tax purposes from those employed in the ordinary course preparation of business if such transaction would give rise to a material its federal income tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencyreturns for the taxable year ending December 31, 2001;
(xil) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company shall not, and the shall not permit any Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) paySubsidiary to, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more other than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors modify or other transaction costs related amend in any material respect or terminate any Company Contract or enter into any new agreement which would have been considered a Company Contract if it were entered into at or prior to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parentdate hereof;
(xiiim) make the Company shall not, and shall not permit any Company Subsidiary to, terminate, amend, modify or commit waive any provision of any standstill agreement or any standstill provisions of other agreements to make capital expenditures which it is a party, and the Company shall, and shall cause each Company Subsidiary to, enforce the provisions of all such agreements;
(n) the Company shall not permit any Company Insurance Subsidiary voluntarily to forfeit, abandon, modify, waive, terminate or otherwise change any of its insurance licenses, except (i) as may be required in excess order to comply with Applicable Law or (ii) such forfeitures, abandonments, terminations, changes, modifications or waivers of $200,000 insurance licenses as would not, individually or in the aggregate, restrict the business or operations of such Company Insurance Subsidiary in any material respect;
(xivo) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company shall not terminate, cancel, amend or modify any insurance coverage maintained by it or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in Subsidiary with respect to any material line assets which is not replaced by a comparable amount of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real propertyinsurance coverage, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvip) (A) enter into, terminate or amend any Material Contract that is material to the Company shall not, and shall not permit any of the Company Insurance Subsidiaries to, make any material change in its (taken as a whole)i) underwriting or claims management, other than (xii) Contracts entered into for salespricing, non-exclusive licenses or services except in the ordinary course of business consistent with the past practice or (yiii) terminations upon reserving practices, except as required by Applicable Law;
(q) the default Company shall not, and shall not permit any Company Subsidiary to, purchase or redeem any shares of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control capital stock of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, or any other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail equity interests or any rights, warrants or options to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiariesacquire any such shares or interests, unless: (x) except for any such policies are simultaneously replaced purchases or redemptions by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary with respect to such Company Subsidiary’s own capital stock or other equity interests;
(r) the Company shall not permit any Company Broker/Dealer or Company Adviser Subsidiary voluntarily to forfeit, abandon, amend, modify, waive, terminate or otherwise change any of its registrations, licenses, qualifications with any Governmental Entity or its memberships in each any self-regulatory organizations, securities exchanges, boards of trade, commodities exchanges, clearing organizations or trade organizations, except (Ai) and as may be required in order to comply with Applicable Law or (Bii) such forfeitures, abandonments, amendments, terminations, changes, modifications or waivers as would not, individually or in the ordinary course of business; or
(xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing)aggregate, nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct restrict the business or operations of such Company Subsidiary in any material respect; and
(s) the Company shall not, and shall not permit any Company Subsidiary to, agree or commit to do any of the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operationsforegoing.
Appears in 1 contract
Samples: Merger Agreement (Mony Group Inc)
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to during the earlier of period from the termination date of this Agreement pursuant to Article 9 or until the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheldwriting, delayed or conditioned), (y) otherwise required by applicable Law, or (z) except as expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):or except as set forth in Schedule 6.1:
(a) The Company and the Company Subsidiaries shall (i) conduct their business only in the ordinary and usual course of business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees (as identified by Parent in consultation with the Company) and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will goodwill and ongoing business shall be unimpaired at the Effective Time, (iii) maintain at least $15,000,000 in cash, cash equivalents and short-term investments, net of outstanding lines of credit and notes payable, as of the date two Business Days prior to the Closing Date; provided, however, that the covenant set forth in this Section 6.1(a)(iii) shall only be applicable until and including September 1, 2008, and shall terminate thereafter, and (iv) use reasonable best efforts to prepare such narratives, synopses and/or reports as are reasonably necessary (determined after consultation with Parent) in connection with proceeding toward closing the IND with respect to the SGX523 product candidate of the Company.
(b) Without limiting the generality of the foregoing Section 5.1(a6.1(a), except as set forth in Section 6.1 of the Company Disclosure Letter and as contemplated by Section 3.4 and Section 3.5, the Company shall notnot directly or indirectly, and shall not permit any of the Company Subsidiaries to, do any of the following:following without the prior written consent of Parent (which consent shall (x) not be unreasonably withheld or delayed with respect to those actions prohibited by subsections (ix), (xii), (xiv), (xvii)(B) (provided, however, that if Parent has not responded to the Company’s request for approval to take an action covered by subsection (xvii)(B)(2) within three Business Days following receipt by Parent of written notice from the Company of such request, then such request shall be deemed approved by Parent), (D) and (F), (xx) and (xxi), and (y) be in the sole discretion of Parent with respect to those actions prohibited by the remaining subsections):
(i) other than except with respect to Intellectual Property, which is addressed in ordinary course of business consistent with past practicesubsections (xvii) and (xviii), purchase or otherwise (A) acquire, sell, lease, transfer transfer, encumber or permit to be subject to any Lien or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries Subsidiaries, taken as a whole, or (B) terminate, cancel or materially modify any Material Contract;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in or the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside aside, make or pay any dividend or other distribution payable in cash, capital stock, property or otherwise with respect to any shares of its capital stock;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of OptionsStock;
(vi) adjust, recapitalize, split, combine, subdivide or reclassify any outstanding shares of its capital stock;
(vii) except for the issuance of Shares Company Common Stock issuable upon the exercise or conversion of Options outstanding on the date hereof or the Warrants or pursuant to the ESPP (it being understood that, between the date of this Agreement or upon exercise and September 15, 2008, no more than $17,500 per bi-weekly pay period of the Top-Up OptionCompany may be withheld pursuant to payroll deductions from participants in the ESPP to be applied toward the purchase of shares of Company Common Stock under the ESPP), and the vesting of Restricted Stock awards and Restricted Stock Units Unit awards granted prior to the execution of this Agreement, issue, sell, grantencumber, dispose of, pledge or otherwise encumber of or authorize, propose or agree to the issuance, sale sale, encumbrance or disposition by the Company or any of the Company Subsidiaries, Subsidiaries of, any shares of, or any options, warrants, calls, commitments warrants or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, stock outstanding on the date hereof;
(viii) incur, or modify in any material respect the terms of, any indebtedness for borrowed money, or assume, guarantee or endorse any such indebtedness of another Person, except indebtedness incurred, assumed or guaranteed in the ordinary course of business consistent with past practice and not in excess of $100,000 in the aggregate;
(ix) make any loans or advances, except to or for the benefit of the Company Subsidiaries;
(x) other than to the extent required in a written contract or agreement in existence as of the date of this Agreement and disclosed in Section 4.10 of the Company Disclosure Letter or as otherwise expressly required by the terms of this Agreement: (A) grant any awards under any Company Employee Benefit Plan (including 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 Company Employee Benefit Plan or awards made thereunder or the commencement of a new purchase period or new offering under the ESPP (whether or not provided by the terms of the ESPP as of the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof), (AB) grant or increase any severance or termination pay to any current or former director, executive officer, employee, agent consultant or consultant independent contractor of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (BC) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiaryindividual, (CD) increase the benefits payable under any existing severance, severance or termination pay policies or employment agreements, (DE) hire any officers (or promote an employee into an officer position) or increase the compensation, bonus or other benefits of any current directoror former directors, executive officer orofficers, other than in the ordinary course of business consistent with past practiceemployees, non-officer employee, agent consultants or consultant, independent contractors of the Company or any Company Subsidiary, (EF) adopt or establish any new employee benefit plan plan, policy, program or arrangement that would be considered a Company Employee Benefit Plan if such plan, policy, program or arrangement were in effect as of the date of this Agreement, or amend in any material respect any existing employee benefit planCompany Employee Benefit Plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (FG) provide any material benefit to a current or former director, executive officer, employee, agent consultant or consultant independent contractor of the Company or any Company Subsidiary not required by any existing agreement or Company Employee Benefit Plan, (H) take any action to accelerate the vesting or payment of any compensation or benefit under any Company Employee Benefit Plan or to fund or in any other way secure the payment of compensation or benefits under any Company Employee Benefit Plan or make any material determinations not in the ordinary course of business under any Company Employee Benefit Plan, or (I) take any action that would result in its incurring any obligation for any payments or benefits described in subsections (i), (ii) or (iii) of Section 4.10(i) (without regard to whether the Transactions are consummated);
(xi) execute or amend (other than as required by existing employee benefit plan.plans or employment agreements or by applicable Law) in any material respect any employment, consulting, severance, termination or indemnification agreement between the Company or any of the Company Subsidiaries and any of their respective directors, officers, agents, consultants, independent contractors or employees, or any collective bargaining agreement or other obligation to any labor organization or employee incurred or entered into by the Company or any of the Company Subsidiaries;
(xxii) make any material changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) methods other than as required by GAAP or applicable Law; change make or rescind any material Tax election; file any amended Tax Return with respect to any material Tax; make any material change to its method of or reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax Tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xixiii) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial StatementsStatements or which relates to any Company Intellectual Property;
(xiixiv) pay, discharge, settle pay or satisfy discharge any claims, Liens, obligations (absolute, accrued, asserted Liens or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, liabilities which are not reserved for or reflected on the balance sheet as of October 1, 2010 sheets included in the Company Financial Statements or incurred since in the ordinary course of business after the date of the Company Financial Statements;
(xv) adopt a plan of complete or partial liquidation (or resolutions providing for or authorizing such audited financial statements liquidation), dissolution, merger, consolidation, restructuring, recapitalization or reorganization of the Company or any of the Company Subsidiaries (other than the Merger);
(xvi) abandon, cease to prosecute, fail to maintain, sell, license, assign or encumber any Permit or other material assets (other than Company Intellectual Property);
(xvii) with respect to Intellectual Property, (A) other than with respect to material transfer or service agreements, sell, assign, license, sublicense, encumber, impair, abandon, fail to maintain, transfer or otherwise dispose of any right, title or interest of the Company or any of the Company Subsidiaries in any Company Intellectual Property, (B) grant any rights under material transfer or service agreements, other than (1) those entered into in the ordinary course of business consistent with past practice in connection with the National Institute of Health Cooperative Agreement Award from the National Institute of General Medical Sciences or the drug discovery collaboration agreement with Cystic Fibrosis Foundation Therapeutics, Inc. or (2) materials sent by the Company pursuant to service agreements existing as of the date hereof, (C) extend, amend, waive, cancel or modify any rights in or to the Company Intellectual Property, (D) fail to diligently prosecute the Patent applications within Owned Company Intellectual Property (provided, however, that with respect to Owned Company Intellectual Property that is jointly owned, the Company’s obligation shall be to diligently prosecute such Patent applications to the fullest extent permitted under existing contractual arrangements with third parties covering such Owned Company Intellectual Property that is jointly owned), (E) divulge, furnish to or make accessible any Trade Secrets within Company Intellectual Property to any Person who is not subject to an enforceable written agreement to maintain the confidentiality of such Trade Secrets, other than presentations required to be given under the National Institute of Health Cooperative Agreement Award from the National Institute of General Medical Sciences or the drug discovery collaboration agreement with Cystic Fibrosis Foundation Therapeutics, Inc., or (F) divulge, furnish to or make accessible any Trade Secrets within Company Intellectual Property to any Person who is not subject to an enforceable written agreement to maintain the confidentiality of such Trade Secrets, other than presentations given by the Company in the ordinary course consistent with past practice, excluding those presentations covered by clause (D) above;
(xviii) (A) enter into any Contract that would result in the grant to the Company or any of the Company Subsidiaries of any right or license in the Intellectual Property of any Person (other than Contracts in connection with the purchase of laboratory reagents and materials), or (B) amend, assign, terminate or fail to exercise a right of renewal or extension under Contract related to Company Intellectual Property;
(xix) (A) enter into, renew, amend or voluntarily terminate any Material Contract or any joint venture, partnership or other similar arrangement, (B) engage in any transaction or series of transactions with any Affiliate that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act, without regard to any monetary thresholds therein, or (C) waive, release or assign any rights or claims under any Material Contract;
(xx) authorize any new capital expenditures in excess of $100,000 in the aggregate, other than those capital expenditures reimbursed by third parties;
(xxi) fail to use reasonable best efforts to keep in full force and effect all insurance policies maintained by the Company and the Company Subsidiaries, other than such policies that expire by their terms (in which event the Company and the Company Subsidiaries shall use reasonable best efforts so that such policies will be renewed or replaced) or changes to such policies made in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xivxxii) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company Parent or any Company Subsidiaryof its Subsidiaries or any of their respective Affiliates or any successor thereto, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective the business and operationsor operations of Parent or any of its Subsidiaries;
(xvxxiii) enter into take any lease action that would or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail would reasonably be expected to exercise result in any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material conditions to the Company and Merger contained in Article 8 not being satisfied or that would or would reasonably be expected to delay the Company Subsidiaries (taken as a whole)consummation of, other than (x) Contracts entered into for sales, non-exclusive licenses or services in impair the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control ability of the Company or that provides for any diminution of material rights of to consummate, the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessTransactions; or
(xxxxiv) take or agree in writing or commit otherwise to take any of the actions precluded by Section 5.1(b6.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to between the earlier of the termination date of this Agreement and the Effective Time or the date, if any, on which this Agreement is terminated pursuant to Article 9 or the Effective TimeSection 8.1, unless except (xi) Parent shall otherwise consent as may be required by Law, (ii) as may be agreed to in writing by Buyer (such which consent shall not be unreasonably withheld, delayed or conditioned), (yiii) otherwise required as may be expressly permitted by applicable Lawthis Agreement, (iv) as may be expressly permitted by the Spin-Off Agreements, or (zv) expressly permitted or required pursuant to this Agreement (including as set forth in Section 5.1 6.1 of the Company Disclosure LetterSchedule, 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, in a manner consistent with past practice in all material respects and in compliance with all applicable Laws in all material respects and, to the extent consistent therewith, each of the Company and its subsidiaries shall use their respective commercially reasonable efforts to (x) subject to prudent management of workforce needs and ongoing programs currently in force, preserve its business organization intact, maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates and continue to manage contracts and relations with such parties in good faith and in a manner consistent with past practice in all material respects, (y) maintain and keep material properties and assets in good repair and condition, subject to ordinary course wear and tear and (z) maintain in effect all material governmental permits necessary to the current operation of the business the Company or any of its subsidiaries. In furtherance thereof the Company agrees to make the capital investments in the Television Business as substantially contemplated by the operating budget of the Television Business in effect on the date hereof. The Company agrees with Buyer that, except as set forth in clauses (i) through (v) above, the Company shall not (and, as applicable, shall cause its subsidiaries not to):
(a) The Company and amend or otherwise change the Company Subsidiaries shall (i) conduct their business only in the ordinary and usual course of business and consistent with past practicesCertificate, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company SubsidiariesBy-laws, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.or such equivalent organizational documents of any of its subsidiaries;
(b) Without limiting issue, deliver, sell, pledge, dispose, encumber, grant or subject to any Lien any shares of its or its subsidiaries’ capital stock, any other voting securities, any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its subsidiaries’ capital stock, or any “phantom” stock, “phantom” stock rights, stock appreciation rights, stock based performance units, or other equity-based awards, including pursuant to contracts as in effect on the generality date hereof; provided, however, that the Company may issue shares of Company Common Stock pursuant to the exercise or settlement of Company Options and Restricted Stock Units outstanding as of the foregoing Section 5.1(a), date hereof or granted after the Company shall not, and shall date hereof not permit any in violation of the Company Subsidiaries to, do any of the following:this Agreement;
(i) other than in ordinary course of business consistent with past practicedeclare, purchase or otherwise acquireauthorize, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declaremake, set aside or pay any dividend or other distribution payable in cash, capital stock, property or otherwise otherwise, with respect to the Company’s or any shares of its capital stock;
(v) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares of its subsidiaries’ capital stock, other equity securities, other ownership interests or than dividends paid by any options, warrants or rights to acquire any such stock, securities or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors subsidiary of the Company in payment of withholding tax upon to the vesting of Restricted Stock and Restricted Stock Units or Company, (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide combine or reclassify any of its capital stock;
(vii) except for stock or issue, authorize the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu ofof or in substitution for, shares of its capital stock or alter any term of any of the Company’s or any of its subsidiaries’ outstanding securities, (iii) effect any recapitalization, reclassification or like change in the capitalization of the Company or any of its subsidiaries or (iv) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities, except for issuances, purchases, redemptions or other acquisitions of capital stock or other securities required under the terms of any plans (including Company Benefit Plans) existing on the date hereof between the Company or any of its Subsidiaries, on the one hand, and any director or employee of the Company or any of its Subsidiaries, on the other hand, or in substitution for connection with the satisfaction of Tax withholding obligations with respect to Company Options or Restricted Stock Units, or acquisitions by the Company in connection with the net exercise of Company Options; provided, however, that dividends, issuances, distributions or redemptions may be made in connection with the Spin-Off Transaction, but only to the extent made in accordance with the express terms of the Spin-Off Agreements;
(d) except (i) as required pursuant to existing written agreements executed prior to, or Company Benefit Plans in effect as of, the date hereof, (ii) as required by, or in order to comply with, applicable Law, (iii) insofar as it creates no additional material liability to the Company or any class subsidiary, or (iv) as otherwise expressly permitted by this Agreement or the Spin-Off Agreements, (A) increase the compensation or other benefits payable or to become payable (including unusual or extraordinary bonuses) to (x) directors or executive officers of the Company or any of its Subsidiaries or (y) employees of the Company or any of its Subsidiaries except, in the case of this clause (y), in the ordinary course of business consistent with past practice (including, for this purpose, the normal salary and bonus review process conducted each year), (B) grant any severance or termination pay to (except as required pursuant to existing agreements, plans or policies), or enter into any severance agreement with any (x) executive or director of the Company or any of its Subsidiaries or (y) any non-executive employee of the Company or any of its Subsidiaries except, in the case of this clause (y), in the ordinary course of business consistent with past practice, (C) enter into or amend any employment agreement with any employee of the Company or any of its Subsidiaries pursuant to which the annual base salary under such agreement exceeds $250,000 per annum, (D) 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) except as expressly provided in the Agreement, establish, adopt, amend or terminate any Company Benefit Plan, or any other plan, policy or arrangement that would have been a Company Benefit Plan had it existed as of the date hereof, (F) amend, waive or otherwise relinquish the Company’s rights under the Non-Competition Agreements or any other non-competition agreement, or (G) grant, confer or award options, convertible securities, restricted stock units or other rights to acquire any of its or its Subsidiaries’ capital stock; provided, outstanding however, that the foregoing shall not restrict the Company or any of its Subsidiaries from making available to newly hired employees or to employees in the context of promotions or raises in compensation, in each case, in the ordinary course of business, plans, policies or arrangements (including equity grants, but excluding severance arrangements) that have a value that is consistent with the past practice of making compensation and benefits available to newly hired or promoted employees in similar positions;
(e) (i) make any loans, advances or capital contributions to any other Person, other than (but only as permitted under applicable Law) to employees and consultants in respect of expenses incurred in the ordinary course of business consistent with past practice, the Company’s expense reimbursement policies or the applicable consulting arrangement as in effect on the date hereof or (ii) pay any management, consulting or similar fee to any affiliate or stockholder (other than employees or directors of this Agreementthe Company or its Subsidiaries in accordance with the ordinary course of business consistent with past practice);
(viiif) acquire or agree to acquire (including by merger, consolidation, or acquisition of equity or debt securities or assets) any corporation, partnership, limited liability company, other business organization or any division thereof, or any assets in connection with acquisitions or investments, in an aggregate amount in excess of $10,000,000 in cash payable prior to the Effective Time; provided nothing hereby shall restrict the Company from agreeing to earn-out consideration in connection with an acquisition to be paid solely by SpinCo or a SpinCo Subsidiary after the Spin-Off Transaction;
(g) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness for any Person except for indebtedness incurred under the Company Credit Agreement;
(h) cancel any indebtedness payable to the Company, or waive or assign any claims or rights of substantial value other than in the ordinary course of business;
(i) make any new, or enter into a “make well” any commitment for, capital expenditure or similar agreement expenditures relating to the Television Business which, in the aggregate, are in excess of $1,000,000, except for capital expenditures or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant expenditures made in the ordinary course of business and consistent with past practicepractice set forth on any operating budget in effect at the time this Agreement is executed and disclosed to Buyer prior to the date hereof;
(j) make or change any material Tax election, (B) execute adopt or change any employmentmaterial accounting method for Tax purposes, deferred compensation file any material amended Tax Return, enter into any closing agreement with respect to, or other similar agreement (otherwise settle, any material Tax claim or any amendment assessment relating to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any of its subsidiaries, surrender any right to claim a refund of material Taxes, or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company Subsidiaryor any of its Subsidiaries;
(k) enter into, modify, amend or terminate any Company Material Contract other than at-will employment arrangements entered into (A) in the ordinary course of business and consistent with past practice that are terminable or (B) if so modified, amended or terminated would not, individually or in the aggregate, reasonably be expected to (x) have either 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;
(l) make any material change to its methods, principles or practices of accounting in effect at will and without December 31, 2012 or revalue any material liability to assets of the Company or any Company Subsidiaryof its subsidiaries, except (i) as required by GAAP (or any interpretation thereof) or 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), (Cii) increase to permit the benefits payable under any existing severanceaudit of the Company’s financial statements in compliance with GAAP, termination pay policies or employment agreements, (Diii) increase the compensation, bonus or other benefits of any current director, executive officer or, as required by a change in applicable Law;
(m) other than in the ordinary course of business consistent with past practice, non-officer employee(i) sell, agent lease, license, transfer, exchange or consultantswap, sell and leaseback, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any material properties or assets (including any such disposition from the Television Business to the Online Business), except (A) pursuant to existing agreements set forth in Section 4.11 of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend Disclosure Schedule in any material respect any existing employee benefit plan, except as necessary effect prior to maintain Tax-qualified status or Tax-favored treatmentthe execution of this Agreement, or (FB) provide as may be required by applicable Law or any Governmental Authority or (ii) enter into, modify, amend or terminate any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.lease;
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal yearn) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors settle any action, suit, investigation or other transaction costs related to this Agreement and proceeding which, in the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures aggregate, require an out-of-pocket expense of the Company in excess of $200,000 1,000,000, or execute on or otherwise attempt to collect any judgment arising from the arbitration matter disclosed in Section 4.12 of the aggregateCompany Disclosure Schedule;
(xivo) enter into sell, transfer or license to any agreement, arrangement or commitment that materially limits person or otherwise materially restricts extend, amend or modify any material rights to the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
intellectual property rights other than (xvi) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;, or (ii) pursuant to the Spin-Off Agreements, or
(xvip) (A) enter into, terminate authorize or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company written agreement or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), otherwise make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances commitment to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees thatUnless Sierra shall otherwise agree in writing, prior to the earlier business of the termination Company shall be conducted in and only in, and the Company shall not take any action except in, the ordinary course of business and in a manner consistent with past practice and in accordance with applicable law; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company, to keep available the services of the current officers, employees and consultants of the Company and to preserve the current relationships of the Company with customers, -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER Page 38 46 suppliers and other persons with which the Company has significant business relations. By way of amplification and not limitation, except as otherwise contemplated by this Agreement, the Company shall not, between the date of this Agreement pursuant to Article 9 or and the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed directly or conditioned), (y) otherwise required by applicable Lawindirectly do, or (z) expressly permitted or required pursuant propose to this Agreement (including Section 5.1 do, any of the Company Disclosure Letter):following without the prior written consent of Sierra:
(a) The Company and amend or otherwise change its Articles of Organization or Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber or authorize the Company Subsidiaries shall issuance, sale, pledge, disposition, grant or encumbrance of (i) conduct their business only any shares of capital stock of any class of the Company, 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 (ii) any assets of the Company, except for sales in the ordinary course of business and usual in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except the distributions described in Schedule 6.1(c) hereto, which shall not exceed $2,430,000 in the aggregate (the "Distribution") except as otherwise provided in Section 6.7;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, except in connection with the merger of the Company and Papyrus Publishing, Inc. on substantially the terms disclosed to Sierra prior to the execution and delivery of this Agreement;
(i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, 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 as an accommodation become responsible for, the obligations of any Person, or make any loans or advances, except in the ordinary course of business and consistent with past practicespractice; (iii) enter into any contract or agreement other than in the ordinary course of business, consistent with past practice; (iiiv) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizationsauthorize any single capital expenditure which is in excess of $10,000 or capital expenditures which are, to maintain their significant beneficial business relationships with suppliersin the aggregate, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services in excess of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to $10,000 for the Company and the Company Subsidiaries, taken as a whole; or (v) enter into or amend any contract, in each caseagreement, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.
(b) Without limiting the generality of the foregoing Section 5.1(a), the Company shall not, and shall not permit any of the Company Subsidiaries to, do any of the following:
(i) other than in ordinary course of business consistent with past practice, purchase commitment or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, property or otherwise arrangement with respect to any shares of its capital stockmatter set forth in this subsection (e);
(vf) purchaseenter into any employment, redeem consulting or otherwise acquireagency agreement, or offer increase the compensation payable or to purchasebecome payable to its officers, redeem employees or otherwise acquire-------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER Page 39 47 consultants, any shares of its capital stock, other equity securities, other ownership interests except as disclosed in Schedule 6.1(f) and except for increases in accordance with existing agreements or any options, warrants or rights to acquire any such stock, securities or interests, other than in connection with (i) the relinquishment of shares by former or current past practices for employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise who are not officers of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company Subsidiaries, of, any shares ofCompany, or any options, warrants, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to to, or enter into any current employment or severance agreement with, any director, officer, employee, agent officer or consultant other employee of the Company Company, or establish, adopt, enter into or amend any Company Subsidiarycollective 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;
(g) take any action, other than severance reasonable and termination pay to any non-officer employee, agent or consultant usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures (B) execute any employmentincluding, deferred compensation or other similar agreement (or any amendment to any such existing agreement) without limitation, procedures with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability respect to the Company or any Company Subsidiary, (C) increase the benefits payment of accounts payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits and collection of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.accounts receivable);
(xh) make any changes in its reporting for Taxes tax election or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material Tax liability federal, state, local or enter into any transaction with an Affiliate outside the ordinary course of business if such transaction would give rise to a material foreign income tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xiii) pay, discharge, settle discharge or satisfy any claimsclaim, Liens, obligations liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more ), other than $250,000 individually the payment, discharge or $500,000 in the aggregatesatisfaction, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business and consistent with past practice, other than fees and expenses of advisors liabilities reflected or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 reserved against in the aggregate;
(xiv) enter into any agreement, arrangement Company Balance Sheet or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease subsequently incurred in the ordinary course of business and consistent with past practice;
(xvij) (A) enter intotake any action that would or is reasonably likely to result in any of the representations and warranties of the Company set forth in this Agreement being untrue, terminate or amend in any Material Contract that is material covenant of the Company set forth in this Agreement being breached, or in any of the conditions to the Company and the Company Subsidiaries Merger specified in Article IV hereof not being satisfied;
(taken as a whole)k) take or agree to take any action specified in Section 2.8 hereof, other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any other material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expirationtransaction other than those specified above, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail agree to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to the earlier of the termination of Except as otherwise contemplated by this Agreement pursuant to Article 9 or the Effective Time, unless (x) Parent shall otherwise consent disclosed in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 5.01 of the Company Disclosure Letter):Schedule, after the date hereof and prior to the Effective Time or earlier termination of this Agreement, unless Parent shall otherwise agree in writing, the Company shall, and shall cause its subsidiaries to:
(a) The Company and the Company Subsidiaries shall (i) conduct their business only respective businesses in the ordinary and usual course of business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.practice;
(b) Without limiting the generality of the foregoing Section 5.1(a), the Company shall not, and shall not permit any of the Company Subsidiaries to, do any of the following:
(i) other than in ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
certificates of incorporation or bylaws or equivalent constitutional documents, (ivii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, property or otherwise otherwise, except for the 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 and regular quarterly dividends on Company Common Stock not in excess of $0.19 per share declared and payable at times consistent with past practice (it being understood and agreed that the record dates for any such quarterly dividends shall be at least 90 days apart);
(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 (i) the Company may issue shares (A) upon exercise of Options outstanding on the date hereof or hereafter granted in accordance with the provisions of subclause (iv) of this clause (c) or pursuant to awards existing as of the date of this Agreement under the LTIP and (B) in accordance with the DRP and the Company's 401-K Plan as in effect on the date of this Agreement, (ii) the Company may (with Parent's prior written consent, which consent shall not be unreasonably withheld) issue shares of Company Common Stock (or warrants or options to acquire Company Common Stock) in connection with acquisitions of assets or businesses pursuant to the proviso of Section 5.01(d), (iii) the Company may issue shares of Company Common Stock pursuant to earnouts from previously completed transactions in accordance with the existing terms of the agreements relating thereto, and (iv) subject to the proviso below, the Company may grant Options to purchase shares of Company Common Stock in accordance with the terms of the Company Option Plans to persons who are not currently directors, officers or employees of the Company or its subsidiaries and are hired by the Company or its subsidiaries after the date of this Agreement and such grants are made consistent with past practice and have an exercise price per share of Company Common Stock no less than the fair market value of a share of Company Common Stock as of the date of grant, provided that the number of Options granted pursuant to this subclause (iv) shall not exceed the number of Options which are outstanding as of the date of this Agreement and which are thereafter canceled or forfeited without exercise and (v) the Company may grant Options and LTIP awards in accordance with the description set forth in Section 5.01 of the Company Disclosure Schedule;
(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 (other than pursuant to credit facilities) or borrowings under the existing credit facilities of the Company or any of its subsidiaries or borrowings under the credit facilities to be entered into substantially on the terms set forth in Section 5.01 of the Company Disclosure Schedule as such facilities may be amended in a manner that does not have a material adverse effect on the Company (the "Existing Credit Facilities") up to the existing borrowing limit on the date hereof, (B) borrowings to refinance existing indebtedness on terms which are reasonably acceptable to Parent, or (C) borrowings in connection with acquisitions as set forth in the proviso in this Section 5.01(d), (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stock;
(v) 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 stock or any options, warrants or rights to acquire any such stock, securities of its capital stock or interests, any security convertible into or exchangeable for its capital stock other than in connection with (i) the relinquishment exercise of shares by former or current employees and directors outstanding Options pursuant to the terms of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or Option Plans, (iiiii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify make any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights acquisition of any kind assets or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (businesses other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any expenditures for current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant assets in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation expenditures for fixed or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into capital assets in the ordinary course of business and other than as set forth in the proviso in this Section 5.01(d), (iv) sell, pledge, dispose of or encumber any assets or businesses other than (A) sales of businesses or assets disclosed in Section 5.01 of the Company Disclosure Schedule, (B) pledges or encumbrances pursuant to Existing Credit Facilities or other permitted borrowings, (C) sales or dispositions of businesses or assets consented to in writing by Parent (which consent shall not be unreasonably withheld) or for which consent is not denied within 24 hours after the Company notifies Parent (such notice to be delivered during business hours on a business day) in writing that it desires to effect such sale or disposition, (D) sales of real estate, assets or facilities for cash consideration (including any debt assumed by the buyer of such real estate, assets or facilities) of less than $100,000 in each such case and (E) sales or dispositions of businesses or assets as may be required by applicable law, or (v) except as contemplated by the following proviso, enter into any binding contract, agreement, commitment or arrangement with respect to any of the foregoing; provided, however, that notwithstanding the foregoing, (I) the Company shall not be prohibited from acquiring any assets or business for cash in one or more transactions in which the aggregate revenues of such businesses and assets do not exceed $80 million in the aggregate and the value of the consideration paid (as determined in accordance with clause II(B)) in each such acquisition satisfies the internal rate of return criteria of the Company's existing acquisition policy as disclosed to Parent and (II) the Company shall not be prohibited from acquiring any assets or businesses or incurring or assuming indebtedness in connection with acquisitions of assets or businesses so long as (A) such acquisitions are disclosed in Section 5.01 of the Company Disclosure Schedule, or (B) the aggregate value (determined at the time of execution of the agreement pursuant to which such business or asset is acquired) of consideration paid or payable in connection with any such acquisition (other than those acquisitions disclosed in Schedule 5.01 of the Company Disclosure Schedule) including any funded indebtedness assumed and any Company Common Stock issued with Parent's prior written consent (which consent shall not be unreasonably withheld) in connection with such acquisitions (valued for purposes of this limitation at a price per share equal to the price of the Company Common Stock on the date the agreement in respect of any such acquisition is entered into) does not exceed 1.5 times the revenues generated by such business or assets for the preceding twelve month period for which financial statements are available and also does not exceed 5.5 times projected earnings before interest, taxes, depreciation and amortization on a pro forma basis for the twelve month period immediately following the expected closing date of the acquisition reflecting reasonably anticipated cost reductions and synergies to be generated by such business or assets. For purposes of the foregoing, any contingent, royalty and similar payments made in connection with acquisitions of businesses or assets shall be included as acquisition consideration and shall be deemed to have a value equal to their present value assuming a 8% per annum discount rate and assuming that all amounts payable for the first five years following consummation of the acquisitions (but not thereafter) are paid. Notwithstanding anything herein to the contrary: (A) the Company will not acquire or agree to acquire any assets or businesses if such acquisition or agreement may reasonably be expected to delay the consummation of the Merger; (B) the Company will not, and will cause its subsidiaries not to, acquire or agree to acquire any assets or businesses if such assets or businesses are not in industries in which the Company currently operates, unless such assets or businesses are acquired incidental to an acquisition of businesses or assets that are in industries in which the Company currently operates and it is reasonable to acquire such incidental businesses or assets in connection with such acquisition; and (C) the Company will not, and will cause its subsidiaries not to, acquire or agree to acquire all or substantially all of the business, assets, properties or capital stock of any entity with securities registered under the Securities Act or the Exchange Act;
(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) subject to restrictions imposed by applicable law, confer with one or more representatives of Parent to report operational matters of materiality and the general status of ongoing operations;
(g) 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 or with any other persons, except pursuant to (i) applicable law, (ii) previously existing contractual arrangements or policies disclosed pursuant to this Agreement or (iii) employment agreements entered into with a person who is hired by the Company or one of its subsidiaries to replace an employee who is terminated or voluntarily resigns and who, at the time of termination, was party to an employment agreement with the Company or one of its subsidiaries, provided that such new employment agreement shall be on terms (including salary and benefits) comparable in all material respects to the contract covering the terminated employee and shall not contain a change of control provision and shall not be for a term of more than one year or provide for severance pay or benefits (other than base salary and benefits payable if such contract had not been terminated prior to the expiration of its term).
(h) not increase the salary or monetary compensation of any person except for increases consistent with past practice that are terminable at will as reflected in the Company's Annual Budget for fiscal 1999 or except pursuant to applicable law or previously existing contractual arrangements;
(i) not adopt, enter into or amend to increase benefits or obligations any pension or retirement plan, trust or fund and without not adopt, enter into or amend in any material liability to the Company or respect any Company Subsidiarybonus, (C) increase the benefits payable under any existing severanceprofit sharing, termination pay policies or employment agreements, (D) increase the compensation, bonus stock option, deferred compensation, health care, employment or other benefits employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any current director, executive officer oremployees or retirees generally, other than in the ordinary course of business, except (i) as required to comply with changes in applicable law, (ii) any of the foregoing involving any such then existing plans, agreements, trusts, funds or arrangements of any company acquired after the date hereof, or (iii) as required pursuant to an existing contractual arrangement or agreement;
(j) not make expenditures, including, but not limited to, capital expenditures, or enter into any binding commitment or contract to make expenditures, except (i) as included in, or consistent with, the Company's Annual Budget for fiscal 1999, (ii) for emergency repairs and other 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), (iii) for repairs and maintenance in the ordinary course of business consistent with past practicepractice or (iv) as expressly permitted by paragraph (d) of this Section 5.01;
(k) not enter into any contract or commitment (i) providing for the provision of services (including, non-officer employeebut not limited to, agent waste disposal, waste hauling, or consultant, of landfill use) by the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend of its subsidiaries that has a term of more than three years and which is reasonably expected to generate more than $15 million in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, revenues over its term or (Fii) provide any material benefit to a current or former director, officer, employee, agent or consultant providing for the purchase of services by the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.of its subsidiaries that has a term of more than one year and which is reasonably expected to involve payments of more than $1 million over its term;
(xl) make any changes in its reporting for Taxes or accounting methodsnot make, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind revoke any material Tax election; election unless required by law or make any material change to its method of reporting income, deductions, agreement or other Tax items for Tax purposes; settle or compromise settlement with any material Tax liability or enter into taxing authority regarding any transaction with an Affiliate outside the ordinary course of business if such transaction would give rise to a material tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after to materially increase the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights obligations of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior Surviving Corporation to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made pay Taxes in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operationsfuture.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to that between the earlier of the termination date of this Agreement pursuant to Article 9 or and the Effective Time, unless (x) Parent shall otherwise consent agree in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including and except as set forth in Section 5.1 of the Company Disclosure Letter):
(a) The Company and Letter or as otherwise expressly contemplated, permitted or required by this Agreement), the Company shall and shall cause each of its Subsidiaries shall to, (i) maintain its existence in good standing under applicable Law, (ii) subject to the restrictions and exceptions set forth in Section 5.1(b) or elsewhere in this Agreement, conduct their its business and operations only in the ordinary and usual course of business and in a manner consistent with past practicesprior practice (it being understood that the continuation of the Process Improvement Project as previously outlined to Parent shall be considered to be in the ordinary and usual course of business), and (iiiii) use their respective commercially reasonable best efforts to maintain and preserve substantially intact their respective its business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain keep available the services of their present its current officers and key employees and to comply in all material respects with all applicable Laws and preserve the requirements current relationships of all Contracts that are material to the Company and its Subsidiaries with customers, suppliers, distributors and other Persons with which the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing or any of its Subsidiaries has business shall be unimpaired at the Effective Timerelations.
(b) Without limiting the generality foregoing, the Company covenants and agrees that between the date of this Agreement and the foregoing Section 5.1(a)Effective Time, the Company shall not, not and shall cause each of its Subsidiaries not permit any to (except as expressly contemplated, permitted or required by this Agreement, as set forth on the applicable subsection of Schedule 5.1(b) of the Company Subsidiaries toDisclosure Letter or with the prior written approval of Parent, do any of the following:such approval not to be unreasonably withheld or delayed):
(i) declare, set aside, make or pay any dividends or other than distributions (whether in cash, stock or property) in respect of any of its or its Subsidiaries’ capital stock, except for dividends in the ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose practice by any of or encumber any assets, rights or securities of the Company and the Company its Subsidiaries that are material on a pro rata basis to the Company and the Company Subsidiaries taken as a wholeequity owners thereof;
(ii) adjust, split, combine 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, shares of its capital stock or that of its Subsidiaries;
(iii) repurchase, 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 (other than (A) the acquisition by merging the Company of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order to pay the exercise price of the Company Stock Options, (B) the withholding of shares of Company Common Stock to satisfy tax obligations with respect to awards granted pursuant to the Company Option Plans and (C) the acquisition by the Company of Company Stock Options in connection with the forfeiture of such awards);
(iv) issue, deliver or consolidating sell any shares of its capital stock or Company Stock Rights, other than (A) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options and Warrants outstanding as of the date of this Agreement in accordance with the terms thereof, or (B) the issuance of shares of Company Common Stock pursuant to the Company ESPP in accordance with the terms thereof on the date of this Agreement (subject to Section 1.11 hereof);
(v) amend the Company Certificate of Incorporation or Company Bylaws or equivalent organizational documents of the Company’s Subsidiaries (whether by purchasing all merger, consolidation or a substantial otherwise);
(vi) purchase an equity interest in in, or a substantial portion of the assets of, any Person or any division or business thereof, if the aggregate amount of the consideration paid or transferred (including all deferred or contingent consideration) by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents orand its Subsidiaries in connection with all such transactions, together with the aggregate amount of all payments that are made, required to be made or reasonably expected to be made by the Company and its Subsidiaries in order to improve or develop such assets, or the assets of such Person that the Company or its Subsidiary invests in, in accordance with the case plans of the Company Subsidiariesfor the next three years after completion of the applicable transaction, their respective Subsidiary Documents;
(iv) 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;
(v) purchase, redeem or otherwise acquirewould exceed $10 million, or offer to purchasemerge or consolidate with any Person, redeem or otherwise acquire, any shares of its capital stock, in each case other equity securities, other ownership interests or any options, warrants or rights to acquire than any such stock, securities action solely between or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors of among the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stockits wholly-owned Subsidiaries;
(vii) except for the issuance sell, lease or otherwise dispose of Shares upon the exercise any of its properties or conversion assets (including capital stock of Options outstanding on the date of this Agreement or upon exercise any Subsidiary of the Top-Up OptionCompany), other than (A) sales or other dispositions of inventory and other assets in the vesting ordinary course of Restricted Stock awards business, (B) leases and Restricted Stock Units granted prior to the execution subleases of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition Owned Real Property and real property leased by the Company or any its Subsidiaries, and voluntary terminations or surrenders of leases on real property held by the Company or its Subsidiaries, in each case, in the ordinary course of business, (C) sales or other dispositions of real estate not utilized in the operations of the Company Subsidiariesor its Subsidiaries with a sale price that does not exceed $2 million individually or $5 million in the aggregate, of(D) sales or other dispositions of assets utilized in the operations of the Company or its Subsidiaries the total value of which does not exceed $5 million in the aggregate; and (E) the transactions described in Section 5.1(b)(vii) of the Company Disclosure Letter;
(viii) pledge, encumber or otherwise subject to an Encumbrance (other than a Permitted Encumbrance) any shares of, of its properties or any options, warrants, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its assets (including capital stock of any classSubsidiary of the Company), or any voting securities or equity interests or any other securities than in respect of, in lieu of, or in substitution for any class the ordinary course of its capital stock, outstanding on the date of this Agreementbusiness;
(viiiix) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or money, issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company of its Subsidiaries;
(ix) except as required by Law or in order to replace , guarantee any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company such indebtedness or any Company Subsidiarydebt 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 severance and termination pay to any non-officer employee, agent or consultant Indebtedness incurred in the ordinary course of business (including any borrowings under the Company’s existing credit facilities and any trade letters of credit);
(x) make any loans or capital contributions to, or investments in, any Person, other than (A) to any of the Subsidiaries of the Company or (B) in the ordinary course of business;
(xi) except for claims and litigation with respect to which an insurer has the right to control the decision to settle, settle any claim or litigation, in each case made or pending against the Company or any of its Subsidiaries, or any of their officers and directors in their capacities as such, other than the settlement of claims or litigation in the ordinary course of business which, in any event (A) is for an amount not to exceed $1 million in excess of accruals therefor reflected in the most recent balance sheet contained in the Company Financial Statements available prior to the date of this Agreement with respect to any such claim or litigation (or series of related claims or litigation) and (B) reasonably would not 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; provided that in no event shall the Company settle any material claim or material litigation relating to the consummation of the transactions contemplated by this Agreement; and provided further that the Company shall (1) promptly notify Parent of the institution of any stockholder litigation against the Company or any of its directors relating to this Agreement, the Merger or the transactions contemplated by this Agreement, (2) keep Parent fully informed on a reasonably current basis regarding all material developments in any such stockholder litigation, (3) provide Parent the opportunity to consult with the Company regarding the defense or settlement of any such stockholder litigation, and (4) give due consideration to Parent’s advice with respect to such stockholder litigation;
(xii) cancel any material Indebtedness or waive any claims or rights of substantial value, in each case other than in the ordinary course of business;
(xiii) change its Tax accounting methods, principles or practices, except as required by GAAP or applicable Laws;
(xiv) 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, other than (A) with respect to non-officers and non-directors in the ordinary course of business consistent with past practicepractice that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company, (B) execute to effect payment of pro rated annual performance bonuses to Company employees pursuant to the Company’s bonus plans in effect as of the date hereof and set forth in Section 5.1(b)(xiv)(B) of the Company Disclosure Letter, (C) to effect payment of severance and stay bonuses to Company employees as set forth in Section 5.1(b)(xiv)(C) of the Company Disclosure Letter, or (D) as expressly contemplated by Section 1.7, Section 1.9, Section 1.10 and Section 1.11 of this Agreement;
(xv) increase benefits payable under any existing severance or termination pay policies or employment agreements; enter into any employment, deferred compensation or other similar agreement (or any amendment to amend any such existing agreement) with any such director, officer, employee, agent officer or consultant employee of the Company or any Company Subsidiaryof its Subsidiaries; or establish, adopt or amend (except as required by applicable Law) any bonus, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other than at-will employment arrangements entered into in the ordinary course benefit plan or arrangement covering any director, officer or employee of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiaryof its Subsidiaries;
(xvi) enter into any collective bargaining agreement or renew, (C) increase the benefits payable under extend or renegotiate any existing severancecollective bargaining agreement, termination pay policies in each case relating to 175 or more employees;
(xvii) hire, terminate the employment agreements, (D) increase the compensation, bonus of or other benefits of reassign any current director, executive officer or, employees other than non-officer employees in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.;
(xxviii) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material Tax liability Liability, fail to file any Tax Return when due, enter any closing agreement, file any materially amended Tax Return or enter into surrender any transaction with an Affiliate outside the ordinary course of business if such transaction would give rise right to claim a material tax liability; waive any statute of limitations Tax refund, offset or other reduction in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencyLiability, except as required by applicable Law;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xivxix) enter into any agreement, agreement or arrangement or commitment that materially limits or otherwise materially restricts in any material respect the Company Company, any of its Subsidiaries or any Company Subsidiary, of their respective Affiliates or any successor thereto or that would reasonably be expected to, after the Effective Time, materially limit or restrict in any material respect the Company Company, any of its Subsidiaries, the Surviving Corporation, Parent or any Company Subsidiaryof their respective Affiliates, from engaging or competing in any material line of business in which it is currently engaged or business, in any geographic area material location or with any Person;
(xx) change the Company’s methods of accounting, except as required by concurrent changes in GAAP or Regulation S-X of the Exchange Act (or regulatory requirements with respect thereto);
(xxi) fail to their respective business use reasonable efforts to maintain existing insurance policies or comparable replacement policies to the extent available for a reasonable cost;
(xxii) make any capital expenditure or commitment for any capital expenditure except (A) as set forth in Section 5.1(b)(xxii) of the Company Disclosure Letter, (B) to the extent consistent with the budget previously disclosed to Parent, (C) in amounts not more than $500,000 for each existing capital expenditure project and for each new capital expenditure project, in either case over and above the budget previously disclosed to Parent, subject to a maximum of $3,000,000 in the aggregate, or (D) to the extent necessary to restore service to Company railroads and guarantee safety in the event of railroad accidents or incidents affecting railroad operations;
(xvxxiii) enter into take any lease action that would reasonably be expected to make any representation or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control warranty of the Company hereunder, or that provides for omit to take any diminution of material rights action reasonably necessary to prevent any representation or warranty of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release hereunder from being, inaccurate in any Person from prior to its expirationrespect at, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of any time before, the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessEffective Time; or
(xxxxiv) agree or commit to take any of the actions precluded by described in this Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees thatExcept as otherwise expressly contemplated by this Agreement, prior as consented to in writing by Parent, as set forth in the Disclosure Schedule or as required by applicable Law, during the period from the date of this Agreement to the earlier to occur of (x) the date of the termination of this Agreement pursuant to Article 9 or (y) the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
(a) The Company shall, and the Company shall cause each of its Subsidiaries shall (i) conduct to, in all material respects carry on their business only respective businesses in the ordinary and usual course of business and and, to the extent consistent with past practicestherewith, (ii) use their respective its reasonable best efforts to maintain and preserve substantially intact their respective its current business organizations, to maintain their significant beneficial business keep available the services of its current officers and vice presidents and preserve its relationships with suppliers, contractors, distributors, customers, licensors, licensees suppliers and others having material significant business dealings with the Company or any of its Subsidiaries, and use its commercially reasonable efforts to preserve its relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.
(b) its employees. Without limiting the generality of the foregoing Section 5.1(a)foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule or as required by applicable Law, the Company shall not, and shall cause each of its Subsidiaries not permit to, without the prior written consent of Parent:
(a) (i) split, subdivide, reclassify, combine, adjust or amend the terms of any of its capital stock (including the Common Stock), (ii) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any shares of capital stock (including the Common Stock), or (iii) repurchase, redeem or otherwise acquire any shares of capital stock (including the Common Stock) or any other securities convertible into or exchangeable or exercisable for any shares of capital stock; provided, however, that (A) the Company may acquire shares of Common Stock in connection with the surrender of shares of Common Stock by holders of Options in order to pay the exercise price thereof, (B) the Company may withhold shares of Common Stock to satisfy tax obligations with respect to awards granted pursuant to the Company Stock Plans, (C) the Company may acquire Options and Restricted Stock Awards upon their exercise, settlement or forfeiture, and (D) each wholly-owned Subsidiary of the Company Subsidiaries tomay repurchase, do redeem or otherwise acquire shares of its capital stock or other equity interests or securities convertible into or exchangeable or exercisable for any shares of the following:its capital stock or other equity interests;
(ib) other than in ordinary course of business consistent with past practiceissue, purchase or otherwise acquiredeliver, sell, leasegrant, transfer pledge, accelerate, transfer, convey, pledge, accelerate, encumber or dispose of any shares of the Company’s capital stock or encumber any assetssecurities convertible into, rights or securities any rights, warrants or options to acquire, any such shares; provided, however, that the Company may issue shares of Common Stock upon exercise of previously granted Options and/or vesting of previously granted Restricted Stock Awards and up to 75,000 shares of Common Stock pursuant to the ESPP in accordance with Section 2.7(d) of this Agreement;
(c) amend the certificate of incorporation or bylaws or other organizational documents of the Company and or its Subsidiaries;
(d) merge or consolidate with any other Person, except for any such transactions between wholly-owned Subsidiaries of the Company Subsidiaries that are material to or between the Company and the Company Subsidiaries taken as a wholeany of its wholly-owned Subsidiaries;
(iie) acquire make any acquisition or agree to make any acquisition (by merging merger, consolidation, acquisition of equity interests or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets ofassets, or by otherwise) of any other manner, business or any business, corporation, partnership, association limited liability company, joint venture or other business organization or division thereof;
(iiif) amend sell, lease, license, transfer or propose to amend the Company Charter Documents orswap, in the case of the Company Subsidiariesmortgage, their respective Subsidiary Documents;
(iv) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, property hypothecate or otherwise with respect encumber (including securitization), or subject to any shares of its capital stock;
(v) purchaseLien other than a Permitted Lien, 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or agree to sell, lease license, transfer or swap, mortgage, hypothecate or otherwise encumber (including securitization), or authorizesubject to any Lien other than a Permitted Lien or otherwise dispose of, propose or agree to the issuance, sale or disposition by any assets of the Company or any of its Subsidiaries, except sales, dispositions or like-kind replacements of inventory or assets in the ordinary course of business consistent with past practice and pursuant to the exercise of the Company’s or such Subsidiary’s reasonable business judgment, or sub-leases of office space (not to exceed 5,000 sq. ft. and not including the Company’s corporate headquarters in Herndon, Virginia) that the Company Subsidiariesor any of its Subsidiaries has vacated;
(g) (i) enter into any new real property leases, ofor (ii)(x) make any modifications to, (y) assign or sublease any shares portion of, or (z) terminate, any Lease or the Company’s or its Subsidiary’s, as applicable, interest in any Leased Real Property;
(h) except for inter-company borrowings between or among the Company and/or one or more of its Subsidiaries, incur, assume, guarantee or become obligated with respect to any additional Indebtedness including by way of an issuance or sale of debt securities, or issue or sell options, warrants, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement 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, 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;
(i) except for (i) inter-company borrowings between or among the Company and/or one or more of its Subsidiaries, or (ii) other borrowings not in excess of $1 million in the aggregate, repurchase or repay any Indebtedness;
(j) except as may be required as a result of a change in regulatory accounting standards and practice or in U.S. GAAP, change any of the accounting principles or practices used by the Company that materially affect the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries;
(ixk) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereofwaive, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material Tax liability pending or enter into any transaction with an Affiliate outside threatened suit, audit, action or claim, other than waivers, settlements or compromises that involve only the ordinary course payment of business if such transaction would give rise to a material tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to monetary damages by the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) payits Subsidiaries, dischargenet of insurance, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving of no more than $250,000 individually or and $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xivi) except as contemplated by this Agreement, terminate, establish, adopt, enter into, make any new grants or awards of stock-based compensation or other benefits under, amend or otherwise modify, any Company Stock Plans, Employee Benefit Plans or employment agreements (or any plan or arrangement that would be a Company Stock Plan, Employee Benefit Plan or employment agreement if in existence on the date hereof), enter into any agreementcollective bargaining agreement with any labor organization or union, arrangement increase the salary, wage, bonus or commitment that materially limits other compensation of any directors or otherwise materially restricts employee of the Company or any Company Subsidiaryof its Subsidiaries except (A) with respect to employees with a designation or title that is below the level of “Senior Vice President,” increases in compensation in connection with annual performance and salary reviews or upon promotion not to exceed, in the aggregate, 4% of total compensation for such class of employees, (B) payment of annual or that would reasonably be expected toquarterly bonuses or non-material increases in benefits, after the Effective Timein each case, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter intobusiness, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expirationfor grants of Options and Restricted Stock Awards as permitted under Section 5.1(b), or modify (D) for transaction bonuses payable to certain employees upon the Closing under the Transaction Bonus Plan in an aggregate amount not to exceed $2,600,000 or waive (E) to the extent required by applicable Law or by any provision ofof the Employee Benefit Plans, any confidentiality, standstill Company Stock Plans or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence employment agreements existing as of the date of this Agreement;
; (xviiiii) fail incur any Change of Control Obligation (as defined in Section 3.16(a)) except as contemplated by this Agreement; (iii) hire any Person or promote any Person (A) to use commercially reasonable efforts be an officer or an employee with a designation of “Vice President” or above, except to keep fill a vacancy in full force and effect all material insurance policies maintained by the Company and the Company Subsidiariesordinary course of business or (B) with an annual base salary in excess of $200,000, unless: other than Persons hired (x) such policies to replace employees who are simultaneously replaced by a comparable amount of insurance coverage; no longer with the Company or its Subsidiaries, or (y) such policies expire to fill vacancies created by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced)employee promotions; or (ziv) changes make or forgive any loan to such policies are made employees or directors (other than making advances of reasonable travel and other business expenses in the ordinary course of business;).
(xixm) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution material Tax election, change any material Tax accounting method or take any material position on any material Tax Return that is inconsistent with elections made or positions taken in preparing or filing similar Tax Returns in prior periods, amend any material Tax Returns, settle or compromise any material Tax liability, enter into any closing agreement or settle or compromise any claim or assessment with respect to a material amount of capital, property transfers, purchase of securities or otherwise) inTaxes, or loan agree to an extension or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take any waiver of the actions precluded by Section 5.1(b). Notwithstanding statute of limitations with respect to the foregoing assessment or determination of Taxes; (but without limiting the foregoing)n) authorize, nothing in this Agreement is intended recommend, propose, adopt or announce an intention to give Parent adopt a plan of complete or Merger Subpartial liquidation or dissolution, directly restructuring, recapitalization or indirectly, the right to control or direct the business or operations other reorganization of the Company or any Subsidiary of the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.Company;
Appears in 1 contract
Samples: Merger Agreement (Deltek, Inc)
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to that between the earlier of the termination date of this Agreement pursuant to Article 9 or and the Effective Time, unless (x) Parent shall otherwise consent agree in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including and except as set forth in Section 5.1 of the Company Disclosure Letter):
(a) The Company and Letter or as otherwise expressly contemplated, permitted or required by this Agreement), the Company shall and shall cause each of its Subsidiaries shall to, (i) maintain its existence in good standing under applicable Law, (ii) subject to the restrictions and exceptions set forth in Section 5.1(b) or elsewhere in this Agreement, conduct their its business and operations only in the ordinary and usual course of business and in a manner consistent with past practicesprior practice (except with respect to the Company’s previously announced program to convert to sell-through accounting as previously disclosed in the Specified Company Reports), and (iiiii) use their respective commercially reasonable best efforts to maintain and preserve substantially intact their respective its business organizations, to maintain their significant beneficial business keep available the services of its current officers and employees and to preserve the current relationships of the Company and its Subsidiaries with customers, suppliers, contractors, distributors, customers, licensors, licensees resellers and others having material business relationships other Persons with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to which the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing or any of its Subsidiaries has business shall be unimpaired at the Effective Timerelations.
(b) Without limiting the generality foregoing, the Company covenants and agrees that between the date of this Agreement and the foregoing Section 5.1(a)Effective Time, the Company shall not, not and shall cause each of its Subsidiaries not permit any to (except as expressly contemplated, permitted or required by this Agreement, as set forth on the applicable subsection of Schedule 5.1(b) of the Company Subsidiaries to, do any Disclosure Letter or with the prior written approval of the following:Parent):
(i) declare, set aside, make or pay any dividends or other than distributions (whether in cash, stock or property) in respect of any of its or its Subsidiaries’ capital stock, except for dividends in the ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose practice by any of or encumber any assets, rights or securities of the Company and the Company its Subsidiaries that are material on a pro rata basis to the Company and the Company Subsidiaries taken as a wholeequity owners thereof;
(ii) acquire by merging adjust, split, combine or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by reclassify any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) purchase, redeem stock or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares that of its capital stock, other equity securities, other ownership interests Subsidiaries or any options, warrants issue or rights to acquire any such stock, securities authorize or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for propose the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, of or in substitution for any class shares of its capital stockstock or that of its Subsidiaries;
(iii) repurchase, 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 or Subsidiary Stock Rights;
(iv) issue, deliver or sell, pledge or encumber or amend the terms of (whether by merger, consolidation or otherwise) any shares of its or its Subsidiaries’ capital stock or any Subsidiary Stock Rights or Company Stock Rights (other than (A) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options outstanding as of the date of this Agreement in accordance with the terms of those options on the date of this Agreement;
, (viiiB) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights the issuance of shares of Company Common Stock pursuant to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or ESPP in order to replace any key employee whose employment is terminated accordance with the Company or a Company Subsidiary after terms thereof on the date of this Agreement (subject to Section 1.9 hereof), or as required by (C) the provisions grant of a options solely to non-executive employees on shares of Company Employee Benefit Plan in effect Common Stock, pursuant to existing plans with an exercise price equal to fair market value on the date hereofof grant, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice (so long as such additional amount of Company Common Stock subject to options granted by the Company does not exceed more than 1% of the number of shares of Company Common Stock outstanding on the date of this Agreement);
(v) take any action that would reasonably be expected to result in any of the conditions set forth in Article VI 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;
(vi) amend the Company Certificate of Incorporation or Company Bylaws or equivalent organizational documents of the Company’s Subsidiaries (whether by merger, consolidation or otherwise);
(vii) incur, create, assume or otherwise become liable for any indebtedness for borrowed money, other than short-term borrowings under existing lines of credit (or under any refinancing of such existing lines) not to exceed $250,000 in the aggregate incurred in the ordinary course of business and in amounts and on terms consistent with prior practice or assume, guaranty, endorse or otherwise become liable or responsible for the obligations of any other Person;
(viii) make any loans, advances or capital contributions to or investments in any other Person (other than loans, advances, capital contributions or investments less than $250,000 in the aggregate made in the ordinary course of business consistent with prior practice);
(ix) merge or consolidate with any other entity or adopt a plan of complete or partial liquidation, dissolution, recapitalization or other reorganization;
(x) change its Tax accounting methods, principles or practices, except as required by GAAP or applicable Laws (other than a change of certain customers from the sell-in method of accounting to the sell-through method of accounting as previously disclosed in the Specified Company Reports);
(xi) 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, other than alterations or amendments (A) made with respect to non-officers and non-directors in the ordinary course of business consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company, (B) execute to effect payment of pro rated annual performance bonuses to Company employees pursuant to the Company’s bonus plans in effect as of the date hereof and set forth in Schedule 5.1(b)(xi) of the Company Disclosure Letter not to exceed $300,000 in the aggregate or (C) as expressly contemplated by Section 1.7 and Section 1.8 of this Agreement;
(xii) increase benefits payable under any existing severance or termination pay policies or employment agreements; enter into any employment, deferred compensation or other similar agreement (or any amendment to amend any such existing agreement) with any such director, officer, employee, agent officer or consultant employee of the Company or any Company Subsidiaryof its Subsidiaries; establish, adopt or amend (except as required by Applicable Law) any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other than at-will employment arrangements entered into in the ordinary course benefit plan or arrangement covering any director, officer or employee of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) of its Subsidiaries; or increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of payable to any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, employee of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to ParentSubsidiaries;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into hire any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the new employees other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease than non-officer employees in the ordinary course of business consistent with past practice;
(xvixiv) sell, license, mortgage, transfer, lease, pledge or otherwise subject to any Encumbrance or otherwise dispose of any properties or assets (A) enter into, terminate including stock or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a wholeother ownership interests of its Subsidiaries), other than (x) Contracts entered into for salesdispositions of obsolete inventory, non-exclusive licenses or services sales in the ordinary course of business and consistent with prior practice and sales with a sale price that does not exceed $50,000 individually or $150,000 in the past practice aggregate;
(xv) acquire any business, assets or securities, other than acquisitions of inventory and components in the ordinary course of business and consistent with prior practice, acquisitions of investment-grade securities with a maturity date not later than October 1, 2006 and acquisitions of other assets with a purchase price that does not exceed $150,000 individually or $750,000 in the aggregate;
(yxvi) terminations upon make or change any material Tax election, settle or compromise any material income Tax Liability, fail to file any Tax Return when due or fail to cause such Tax Returns when filed to be complete and accurate in all material respects, enter any closing agreement, or surrender any right to claim a material Tax refund, offset or other reduction in Tax Liability;
(xvii) enter into any agreement or arrangement that limits or otherwise restricts in any material respect the default Company, any of its Subsidiaries or any of their respective Affiliates or any successor thereto or that could, after the other party thereto after notice and a failure Effective Time, limit or restrict in any material respect the Company, any of its Subsidiaries, the other party to cure such default; Surviving Corporation, Parent or any of their respective Affiliates, from engaging or competing in any line of business, in any location or with any Person;
(xviii) (A) amend, modify, supplement or terminate any Company Material Contract, or enter into any Company Material Contract except in the ordinary course of business, or (B) enter into any Contract new agreements or modify any existing agreements to provide for new discounts, rebates or “most favored nation” terms or any other similar type of pricing or allocation preference protection which is not terminable or changeable by the Company within three (3) months;
(xix) enter into any joint venture, partnership or other similar arrangement, other than arrangements with distributors or resellers in the ordinary course of business that do not result in the formation of any third party that grants such third party any material rights upon a change of control person or funding obligations of the Company or that provides for any diminution of Subsidiary;
(xx) cancel any material debts or waive any material claims or rights of substantial value (including the cancellation, compromise, release or assignment of any indebtedness owed to, or claims held by, the Company or any its Subsidiaries) other than the Company Subsidiaries upon a write-off or write-down of delinquent accounts receivable in the ordinary course of business and consistent with prior practice and cancellations or waivers the total value of which does not exceed $250,000 in the aggregate;
(xxi) change the Company’s methods of control accounting, except as required by concurrent changes in GAAP, or in Regulation S-X of the Company Exchange Act, as agreed to by its independent public accountants or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement otherwise in connection with the Company’s review of strategic alternativespreviously announced program to convert to sell-through accounting as previously disclosed in the Specified Company Reports;
(xviixxii) create settle, or offer or propose to settle, (A) any material litigation, investigation, arbitration, proceeding or other claim involving or against the Company Subsidiaryor any of its Subsidiaries, (B) any stockholder litigation or dispute against the Company or any of its officers or directors or (C) any litigation, arbitration, proceeding or dispute that relates to the transactions contemplated hereby (each, a “Settlement”) other than Settlements pursuant to written agreements to which the Company Subsidiaries that are already in existence is a party as of the date hereof copies of this Agreementwhich have been made available to Parent, and Settlements not involving injunctive relief against the Company and for amounts which would be within the policy limits of applicable Company insurance policies;
(xviiixxiii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by take any action that would make any representation or warranty of the Company and hereunder, or omit to take any action necessary to prevent any representation or warranty of the Company Subsidiarieshereunder from being, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (inaccurate in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) inrespect at, or loan or advance toas of any time before, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessEffective Time; or
(xxxxiv) agree or commit to take any of the actions precluded by described in this Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to that between the date of this Agreement and the earlier of the termination of Effective Time and the date, if any, on which this Agreement is validly terminated pursuant to Article 9 or the Effective TimeVII, unless except (xA) Parent shall otherwise consent as set forth in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
, (aB) The Company and as permitted or required by this Agreement, (C) as required by Law or (D) as consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall and shall cause each of its Subsidiaries shall to, (i) maintain its existence in good standing under applicable Law (where such concept is applicable), (ii) subject to the restrictions and exceptions set forth in Section 5.1(b) or elsewhere in this Agreement, conduct their its business and operations in all material respects only in the usual, regular and ordinary and usual course of business and in a manner consistent with past practicespractice and (iii) use commercially reasonable efforts to, in all material respects, (iiA) use their respective reasonable best efforts to maintain preserve intact its assets, properties, Contracts or other legally binding understandings and preserve substantially intact their respective business organizations, to maintain their significant beneficial business (B) keep available the services of its current officers and key employees and consultants and (C) preserve the current relationships of the Company and its Subsidiaries with supplierscustomers, contractorsvendors, distributors, customerslessors, licensors, licensees and others having material business relationships other Persons with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to which the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing or any of its Subsidiaries has significant business shall be unimpaired at the Effective Timerelations.
(b) Without limiting The Company covenants and agrees that between the generality date of this Agreement and the earlier of the foregoing Section 5.1(a)Effective Time and the date, if any, on which this Agreement is validly terminated pursuant to Article VII, the Company shall not, not and shall cause each of its Subsidiaries not permit any to (except as expressly contemplated, permitted or required by this Agreement, as set forth on the applicable subsection of Section 5.1(b) of the Company Subsidiaries toDisclosure Letter or with the prior written approval of Parent, do any of the following:which approval shall not be unreasonably withheld, conditioned or delayed):
(i) declare, set aside, establish a record date for, make or pay any dividends or other than distributions (whether in ordinary course cash, shares or property) in respect of business consistent any of its shares or other Equity Interests or enter into any agreement with past practicerespect to the voting of its shares or other Equity Interests, purchase except dividends or otherwise acquire, sell, lease, transfer or dispose of or encumber other distributions from any assets, rights or securities Subsidiary of the Company and the Company Subsidiaries that are material to the Company and or any wholly-owned Subsidiary of the Company Subsidiaries taken as a wholeCompany;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets ofadjust, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide combine or reclassify any capital stock;
(vii) except for of its shares or that of its Subsidiaries or issue or authorize or propose the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, of or in substitution for any class shares of its shares or that of its Subsidiaries;
(iii) repurchase, redeem or otherwise acquire, directly or indirectly, any shares of its or its Subsidiaries' share capital stockor any Company Rights or Subsidiary Rights (except in connection with (A) Tax withholdings and exercise price settlements upon the exercise of Company Options; (B) vesting, forfeiture or repurchase of Company RSUs outstanding on the date of this AgreementAgreement and in accordance with their present terms; or (C) transactions between the Company and a wholly owned Subsidiary or between wholly owned Subsidiaries;
(viiiiv) incur issue, deliver or sell, pledge or encumber any indebtedness for borrowed money (shares of its or its Subsidiaries' shares, or any Company Rights or other Equity Interests other than trade payables(A) issuances of Company Ordinary Shares in respect of any exercise of any Company Rights currently outstanding, including the vesting or guarantee settlement any such indebtedness Company Rights, (B) sales of Company Ordinary Shares pursuant to the exercise of Company Options if necessary to effectuate an optionee direction upon exercise or enter into a “make well” pursuant to the settlement of Company Right in order to satisfy Tax withholding obligations, or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of (C) transactions between the Company and a wholly owned Subsidiary or any between wholly owned Company Subsidiaries;
(ixv) except as required by Law cause, permit or in order propose any amendment to replace any key employee whose employment is terminated with the Company articles of association or a Company Subsidiary after the date memorandum of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant association of the Company or amend any Company Subsidiaryorganizational document of any Subsidiary of the Company;
(vi) incur, create, assume or otherwise become liable for any Indebtedness for borrowed money or assume, guaranty, endorse or otherwise agree to become liable or responsible for the Indebtedness for borrowed money of any other than severance and termination pay to any non-officer employeePerson, agent or consultant in except for the ordinary course of business and consistent with past practiceBridge Debt; provided, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of that nothing contained herein shall prohibit the Company or any Company Subsidiary, other than at-will employment arrangements entered into in of its Subsidiaries from making guarantees or obtaining letters of credit or surety bonds for the ordinary course benefit of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease commercial counterparties in the ordinary course of business consistent with past practice;
(xviA) make any loans or advances to any other person other than (1) in the ordinary course of business consistent with past practice; (2) pursuant to existing agreements in effect prior to the execution of this Agreement; or (3) in accordance with the indemnification and expense advancement provisions of the Company Articles of Association or the Company Memorandum or (B) make any capital contributions to or investments in any other Person except for loans or capital contributions among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries;
(viii) 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 other than transactions between the Company and a wholly owned Subsidiary or between wholly owned Subsidiaries;
(ix) 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, individual service providers or Affiliates of the Company or any of its Subsidiaries, other than alterations or amendments (A) enter intomade with respect to non-officers and non-directors in the ordinary course of business consistent with past practice, terminate (B) as expressly contemplated by Section 1.7, (C) required under applicable Law or amend by the terms of any Material Contract that is material of the Company or any Subsidiary, as in effect on the date of this Agreement, or (D) required pursuant to the terms of a Company and Benefit Plan or an agreement with a newly hired employee on terms consistent in all material respects with those provided to other employees of the Company or its Subsidiaries (taken as a whole), other than of comparable level;
(x) Contracts entered into hire any new officers (which for salesthis purpose shall be employees with a title of the level of at least "vice president" or its equivalent);
(xi) sell, license, mortgage, transfer, lease, pledge or otherwise subject to any Encumbrance (including by sale of shares or assets) or otherwise dispose of any business or material rights, properties or assets (including shares or other ownership interests of its Subsidiaries), except (A) pursuant to existing agreements in effect prior to the execution of this Agreement, (B) in the case of Encumbrances, for Permitted Encumbrances or Encumbrances created or perfected in connection with any Indebtedness permitted to be incurred, assumed or guaranteed pursuant to Section 5.1(b)(vi), (C) sales of products or services in the ordinary course of business, or dispositions of obsolete or worthless equipment, (D) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business, and (E) for transactions among the Company and its wholly owned Subsidiaries or services among wholly owned Company Subsidiaries;
(xii) acquire (by merger, consolidation or acquisition of shares or assets) any business for which the aggregate amount to be paid in respect of such business would exceed $500,000;
(xiii) prepare or file any Tax Return inconsistent with past practice or, on any such Tax Return, take any position, make or change 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 (including positions, elections or methods that would have the effect of deferring income to periods ending after the Effective Time or accelerating deductions to periods ending on or before the Effective Time), settle or otherwise compromise any claim relating to Taxes, enter into any closing agreement or similar agreement relating to Taxes, otherwise settle any dispute relating to Taxes or request any ruling or similar guidance with respect to Taxes, enter into any Tax indemnity, sharing, allocation or similar agreement or closing agreement, adopt or change any accounting method in respect of Taxes, incur any liability for Taxes outside the ordinary course of business, fail to pay any Tax that becomes due and payable (including any estimated Tax payment), or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment, other than as set forth in Section 5.10 (Tax Ruling);
(xiv) except (A) in the ordinary course of business consistent with the past practice practice, or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract in accordance with any third party that grants such third party any material rights upon a change of control the Company's budget described on Section 5.1(b)(xiv) of the Company Disclosure Letter, incur or that provides for commit to incur any diminution capital expenditures, or any obligations or liabilities in connection therewith;
(xv) pay, discharge, settle, cancel, incur or satisfy any material Liabilities, other than the payment, discharge, settlement, cancellation, incurrence or satisfaction of material rights Liabilities (A) in the ordinary course of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated business consistent with past practice, (B) as required by such third party upon a change of control of the Company or any applicable Law, (C) release as accrued for in the Company Financial Statements, (D) as required by the terms of any Person from prior to its expirationContract of the Company, as in effect on the date of this Agreement, or modify (E) not in excess of $150,000 individually or waive $250,000 in the aggregate;
(xvi) apply for any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternativesGovernment Grant;
(xvii) create enter into, engage in or amend any Company Subsidiarytransaction, other than the Company Subsidiaries that are already in existence as of the date of this AgreementContract or understanding with any Related Party or any interested parties (Ba'alay Inyan);
(xviii) fail enter into, modify, amend or terminate (A) any Contract that if so entered into, modified, amended or terminated would reasonably be likely to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by have a comparable amount of insurance coverage; Company Material Adverse Effect or (y) such policies expire prevent or materially delay the consummation of the transactions contemplated by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, this Agreement or (B) to a direct or indirect wholly-owned any Company SubsidiaryMaterial Contract, in each of except (A) and (Bx) in the ordinary course of business, (y) for expirations, renewals or non-renewals in accordance with their terms or (z) as otherwise permitted pursuant to any other clause of this Section 5.1(b);
(xix) terminate any officer (which for this purpose shall be employees with a title of "vice president" or its equivalent or more senior) of the Company or any of its Subsidiaries other than for good reason or for reasonable cause;
(xx) 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;
(xxi) compromise, release, waive or settle any Action except for any Action (A) for which the Company has accrued for in the Company Financial Statements and as so accrued; or (B) with the amount is dispute, or the amount claimed does not exceed $150,000;
(xxii) implement any employee layoffs without complying with WARN;
(xxiii) abandon or allow to lapse or expire any registration or application for material Registered Company Intellectual Property; or
(xxxxiv) knowingly commit, authorize, agree or commit to take or enter into any letter of intent or similar agreement or arrangement with respect to any of the actions precluded by described in this Section 5.1(b). Notwithstanding the foregoing .
(but without limiting the foregoing), nothing c) Nothing contained in this Agreement is intended to give Parent or Merger SubParent, directly or indirectly, the right to control or direct the business or operations of the Company or the Company any of its Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the each of Parent and Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business its and its Subsidiaries' respective operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to that between the earlier of the termination date of this Agreement pursuant to Article 9 or and the Effective Time, unless (x) Parent shall otherwise consent agree in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including and except as set forth on Section 5.1 6.1 of the Company Disclosure Letter):
(a) The Company and Schedules or as otherwise expressly contemplated, permitted or required by this Agreement), the Company shall and shall cause each of its Subsidiaries shall to (i) maintain its existence in 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 their its business and operations only in the ordinary and usual course of business and in a manner consistent with past practices, prior practice and (iiiii) use their respective commercially reasonable best efforts to maintain and preserve substantially intact their respective its business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain keep available the services of their present its current officers and key employees and to comply in all material respects with all applicable Laws and preserve the requirements current relationships of all Contracts that are material to the Company and its Subsidiaries with customers, suppliers, distributors and other Persons with which the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing or any of its Subsidiaries has business shall be unimpaired at the Effective Timerelations.
(b) Without limiting the generality foregoing, the Company covenants and agrees that between the date of this Agreement and the foregoing Section 5.1(a)Effective Time, the Company shall not, not and shall cause each of its Subsidiaries not permit any to (except as expressly contemplated, permitted or required by this Agreement, as set forth on the applicable subsection of Section 6.1(b) of the Company Subsidiaries to, do any Disclosure Schedules or with the prior written approval of the following:Parent):
(i) other than in ordinary course of business consistent with past practice, purchase cause or otherwise acquire, sell, lease, transfer or dispose of or encumber permit any assets, rights or securities of the Company and the Company Subsidiaries that are material amendments to the Company and Certificate of Incorporation, the Company Subsidiaries taken as a wholeBylaws or other governing documents, or equivalent organizational documents of the Company’s Subsidiaries;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside aside, make or pay any dividend dividends or other distribution payable distributions (whether in cash, capital stock, stock or property or otherwise with any combination thereof) in respect to of any shares of its capital stock;
(viii) purchaseadjust, redeem split, combine or otherwise acquire, or offer to purchase, redeem or otherwise acquire, reclassify any shares of its capital stock, other equity securities, other ownership interests stock or any options, warrants that of its Subsidiaries or rights to acquire any such stock, securities issue or interests, other than in connection with (i) the relinquishment of shares by former authorize or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for propose the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, of or in substitution for any class shares of its capital stockstock or that of its Subsidiaries;
(iv) repurchase, redeem or otherwise acquire, directly or indirectly, any shares of its or its Subsidiaries’ capital stock or any Company Stock Rights or Subsidiary Stock Rights, except pursuant to restricted stock award agreements outstanding on the date hereof or permitted to be entered into after the date hereof under clauses (v)(A), (B) or (C) of this Section 6.1(b);
(v) issue, deliver or sell, pledge, encumber or amend any term of any shares of its or its Subsidiaries’ capital stock or any Company Stock Rights, other than (A) the issuance of shares of Company Common Stock upon the exercise of Company Stock Options or distribution of Director Deferred Shares, (B) pursuant to the Company ESPP or (C) the issuance of Company Stock Options pursuant to, and in amounts no greater than those specified in, any offer letters outstanding as of the date of this Agreement;
(viiivi) incur (A) knowingly take any action that is reasonably likely to make any representation or warranty of the Company hereunder, or omit to take any action necessary to prevent any representation or warranty hereunder from being, inaccurate in any material respect at, or as of any time before, the Effective Time or (B) take any action that would reasonably be expected to materially impair the ability of the Company to consummate the Merger or the other transactions contemplated by this Agreement in accordance with the terms hereof or materially delay the consummation of the Merger;
(vii) incur, create, assume or otherwise become liable for any indebtedness for borrowed money (money, other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights of the Company’s Subsidiaries to acquire any debt securities of the Company or any Company Subsidiaries;
of its wholly-owned Subsidiaries and short-term borrowings under existing lines of credit (ixor under any refinancing of such existing lines) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant incurred in the ordinary course of business and consistent with past practiceprior practice or assume, guaranty, endorse or otherwise become liable or responsible for the obligations of any other Person, or enter into any arrangement having the economic effect of any of the foregoing;
(viii) make any loans, advances or capital contributions to or investments in any other Person, other than (A) by the Company or any of its Subsidiaries to or in the Company or any of its Subsidiaries, or (B) loans, advances, capital contributions or investments made in the ordinary course of business consistent with prior practice that are not, individually or in the aggregate, in an amount greater than $250,000;
(ix) merge or consolidate with any other entity or adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(x) change its accounting methods, principles or practices, except as required by GAAP or applicable Laws;
(xi) (A) increase the amount of compensation, bonus or other benefits payable to any current or former director, officer or employee of the Company or its Subsidiaries, (B) execute grant any severance or termination pay or benefits (or increase the amount of such pay or benefits, or extend the notice periods for termination) to any current or former director, officer, employee or independent contractor of the Company or any of its Subsidiaries, except (1) any such grants that the Company is required to make pursuant to any agreement in effect as of the date hereof and disclosed on Section 6.1(b)(xi) of the Company Disclosure Schedule or (2) pursuant to clauses (G) or (H) below, (C) establish, pay, agree to grant or increase any special bonus, stay bonus, retention bonus or any similar benefit under any plan, agreement, award or arrangement, (D) (1) prior to July 1, 2007, hire any employee at an aggregate annual rate of base compensation of more than $175,000; provided, that Parent shall respond to any request by the Company for consent to an exception to this Section 6.1(b)(xi)(D)(1) promptly, and in any event within three Business Days after receiving a written request for consent thereto or (2) after July 1, 2007, hire any employee other than in the ordinary course of business consistent with the Company’s fiscal 2008 operating plan set forth in Section 6.1(b)(xi) of the Company Disclosure Schedule (the “Operating Plan”), after first consulting in good faith with Parent, (E) enter into any new employment, severance, change in control, Tax gross-up, deferred compensation or other similar agreement or arrangement (or any amendment to amend any such existing agreement), except as set forth on Section 6.1(b)(xi) of the Company Disclosure Schedule and other than the Company’s standard form offer letters with new hires the hiring of whom is otherwise consistent with this Section 6.1(b), (F) except as required by Applicable Law, enter into or amend in any material respect any collective bargaining agreement or other contract or understanding with any labor union or organization, (G) except as required by Applicable Law or as the Company deems necessary or appropriate to avoid adverse Tax consequences to itself or its current or former directors, officers, or employees, establish, adopt, amend or terminate any Company Benefit Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Benefit Plan if it had been in existence as of the date of this Agreement or (H) except as the Company deems necessary or appropriate to avoid adverse Tax consequences to itself or its current or former directors, officers, employees or independent contractors, enter into or amend in any material respect any agreement, contract or arrangement with any such directorindividual or commit to provide any material payment or any material benefit to any such individual (with “material” for the purposes of this clause (H) meaning material in relation to such agreement, officercontract or arrangement); provided, employeehowever, agent or consultant that in the case of clauses (G) and (H), the Company shall not take any action to avoid such adverse Tax consequences that would result in more than a de minimis increase in the costs to Parent of the Company transactions contemplated by this Agreement or any Company Subsidiary, other that would result in a more than at-will employment arrangements entered into in the ordinary course de minimis diminution of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under that would reasonably be expected to accrue to Parent from the Merger or the consummation of the transactions contemplated hereby;
(xii) sell, license, mortgage, transfer, lease, pledge or otherwise subject to any existing severance, termination pay policies Encumbrance or employment agreements, otherwise dispose of any material properties or assets (D) increase the compensation, bonus including stock or other benefits ownership interests of any current director, executive officer orits Subsidiaries), other than in the ordinary course of business consistent with past prior practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make acquire (by merger, consolidation, acquisition of stock or commit to make capital expenditures in excess assets or otherwise), directly or indirectly, any asset, security, property, interest or business, other than the acquisition of $200,000 assets or properties used in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default operations of the other party thereto after notice Company’s and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease its Subsidiaries’ business in the ordinary course of business consistent with past practice;
(xiv) enter into any material joint venture, partnership or similar arrangement;
(xv) make or change any material Tax election not consistent with prior practice, settle or compromise any material income Tax claim, audit or assessment, enter into any closing agreement, surrender any right to claim a material Tax refund, offset or other reduction in Tax Liability, fail to file any material Tax Return when due or fail to cause such Tax Returns when filed to be complete and accurate in all material respects;
(xvi) incur or commit to any capital expenditures or any obligations or liabilities in connection therewith in excess of $750,000 per three-month period; provided that after July 1, 2007, no such consent shall be required if such capital expenditures are in amounts that do not exceed the amounts contemplated in the Operating Plan (after good faith consultation with Parent);
(xvii) (A) enter into any agreement or arrangement that limits or otherwise restricts in any material respect the Company, any of its Subsidiaries or any of their respective Affiliates or any successor thereto or that could, after the Effective Time, limit or restrict in any material respect the Company, any of its Subsidiaries, the Surviving Corporation, Parent or any of their respective Affiliates, from engaging or competing in any line of business, in any location or with any Person or (B) enter into, amend in any material respect, modify in any material respect or terminate or amend any Company Material Contract that is or any license to or from any Person with respect to any material to Intellectual Property (other than (i) entering into nonexclusive licenses of Company products or generally commercially available off-the-shelf software licenses, in each case in the Company ordinary course of business and the Company Subsidiaries (taken as a whole)ii) after July 1, 2007, other than as consistent with the Operating Plan (xafter good faith consultation with Parent)), or (C) Contracts entered into otherwise waive, release or assign any material rights, claims or benefits of the Company or any of its Subsidiaries; provided, that Parent shall respond promptly, and in any event within three (3) Business Days, after receiving a written request by the Company for salesconsent to an exception to Section 6.1(b)(xvii)(B);
(xviii) transfer or license to any Person or otherwise extend, non-exclusive licenses amend or services modify any rights to any material Company Intellectual Property, other than in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party pursuant to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control contract or agreement of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from has been disclosed in writing to Parent prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviiixix) fail initiate, settle or agree to use commercially reasonable efforts to keep in full force and effect all settle, (i) any material insurance policies maintained by Proceeding or other claim involving or against the Company and or any of its Subsidiaries, (ii) any stockholder litigation or dispute against the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount or any of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed its officers or replaced); directors or (ziii) changes any Proceeding that relates to such policies are made in the ordinary course of businesstransactions contemplated hereby;
(xixxx) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employeesas expressly permitted by Section 6.6, take any action for the purpose of preventing, delaying or (B) to a direct impeding the consummation of the Merger or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessother transactions contemplated by this Agreement; or
(xxxxi) agree agree, resolve or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing described in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operationsSection 6.1(b).
Appears in 1 contract
Samples: Merger Agreement (Webmethods Inc)
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to From the earlier of the termination date of this Agreement pursuant to Article 9 or until the Effective Time, except (i) as required by applicable Law or by a Governmental Entity, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule or (iii) as otherwise contemplated by this Agreement (including execution of the Agency Plan), unless (x) Parent shall otherwise consent in writing (such which consent shall not unreasonably be unreasonably withheld, delayed or conditioned), the Company shall, and shall cause each of the Company Subsidiaries to, conduct its business in the ordinary course consistent with past practices and, to the extent consistent therewith, use its commercially reasonable efforts to preserve intact its business organization and goodwill and relationships with customers, third party payors, including Governmental Entities, Company Producers and others having material business dealings with it, and to keep available the services of its current officers and key employees. In addition to and without limiting the generality of the foregoing, except (yi) otherwise as required by applicable LawLaw or by a Governmental Entity, or (zii) expressly permitted or required pursuant to this Agreement (including as set forth in Section 5.1 of the Company Disclosure Letter):
Schedule or (aiii) The Company and as otherwise contemplated by this Agreement (including execution of the Company Subsidiaries shall (i) conduct their business only in Agency Plan), from the ordinary and usual course of business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at date hereof until the Effective Time.
(b) Without limiting , without the generality prior written consent of the foregoing Section 5.1(a)Parent, which consent shall not unreasonably be withheld, delayed or conditioned, the Company shall not, and shall not permit any of the Company Subsidiaries Subsidiary to, do any of the following:
(ia) adopt or propose any change in its charter, code of regulations or other than in ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholecomparable organizational documents;
(iib) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(ivi) declare, set aside aside, make or pay any dividend or other distribution payable (whether in cash, capital stock, property stock or otherwise with property) in respect to of any shares of its capital stock;
(v) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares of its capital stock, except for (A) dividends or distributions by wholly owned Company Subsidiaries to the Company or another wholly owned Subsidiary or (B) regular quarterly cash dividends paid by the Company on the Company Common Stock not in excess of $0.13 per share per quarter (appropriately adjusted to reflect any stock dividends, subdivisions, splits, combinations or other equity securitiessimilar events relating to the Company Common Stock), with usual record and payment dates and in accordance with the Company’s past dividend policy, (ii) adjust, split, combine or reclassify any of its capital stock or issue or propose or authorize the issuance of any other ownership interests or any securities (including options, warrants or rights to acquire any such stock, securities or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company Subsidiaries, of, any shares ofsimilar security exercisable for, or any optionsconvertible into, warrants, calls, commitments or rights of any kind or any such other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities security) in respect of, in lieu of, or in substitution for any class for, shares of its capital stock, outstanding on the date of this Agreement;
or (viiiiii) incur any indebtedness for borrowed money (other than trade payables) repurchase, redeem or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to otherwise acquire any debt securities shares of the capital stock of the Company or any Company SubsidiariesSubsidiary, or any other equity interests or any rights, warrants or options to acquire any such shares or interests;
(ixc) except as required issue, sell, pledge, grant any rights in respect of or otherwise encumber any shares of its capital stock or other securities (including any options, warrants or any similar security exercisable for, or convertible into, such capital stock or similar security) or make any changes (by Law combination, merger, consolidation, reorganization, liquidation or otherwise) in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant capital structure of the Company or any Company Subsidiary, other than severance (i) issuances of shares of Company Common Stock upon the exercise of Company Stock Options and termination pay Company SARs in accordance with their terms in effect as of the date hereof, (ii) issuances of shares of Common Stock in satisfaction of Director Units and Performance-Based Awards in accordance with their terms in effect as of the date hereof, or (iii) issuances by a wholly owned Company Subsidiary of capital stock to such Company Subsidiary’s parent or another wholly owned Company Subsidiary;
(d) subject to Section 6.3, (i) redeem the Rights, or amend or modify or terminate the Rights Agreement other than to delay the Distribution Date (as defined in the Rights Agreement) or to render the Rights inapplicable to the execution, delivery and performance of this Agreement and the transactions contemplated hereby, or (ii) change the redemption price for the Rights from the redemption price currently in effect;
(e) merge or consolidate with any non-officer employeeother Person or acquire any material assets or make a material investment in (whether through the acquisition of stock or otherwise) any other Person, agent other than (i) acquisitions of inventory, equipment or consultant software in the ordinary course of business consistent with past practice or (ii) ordinary course investment portfolio transactions in accordance with the Company’s investment guidelines in effect on the date hereof;
(f) sell, lease, license, subject to a Lien, other than a Permitted Lien, encumber or otherwise surrender, relinquish or dispose of any material assets, product lines or businesses of the Company or its Subsidiaries (including capital stock or other equity interests of a Company Subsidiary) except (i) pursuant to existing written contracts or commitments set forth in Section 5.1(f) of the Company Disclosure Schedule, or (ii) in an amount not in excess of $250,000 individually or $1,000,000 in the aggregate or (iii) ordinary course investment portfolio transactions in accordance with the Company’s investment guidelines in effect on the date hereof;
(g) (i) make any loans, advances or capital contributions to any other Person, other than (A) in connection with the agency loan program of the Company not in excess of $5 million in the aggregate, (B) by the Company or any Company Subsidiary to or in the Company or any Company Subsidiary and (C) ordinary course investment portfolio transactions in accordance with the Company’s investment guidelines in effect on the date hereof, (ii) create, incur, guarantee or assume any indebtedness for borrowed money in excess of $10 million, (iii) make or commit to make any capital expenditure in excess of $1 million in the aggregate during any 12 month period other than capital expenditures approved by the Board of Directors of the Company prior to the date hereof or within the Company’s capital budget for fiscal 2007 previously provided to Parent or (iv) cancel any debts, except for cancellations made in the ordinary course of business consistent with past practice;
(h) amend or otherwise modify benefits under any Company Benefit Plan (other than immaterial amendments or modifications), accelerate the payment or vesting of benefits or amounts payable or to become payable under any Company Benefit Plan as currently in effect on the date hereof (except as expressly provided in Section 1.9 hereof), fail to make any required contribution to any Company Benefit Plan, merge or transfer any Company Benefit Plan or the assets or liabilities of any Company Benefit Plan, change the sponsor of any Company Benefit Plan, or terminate or establish any Company Benefit Plan, except (i) to the extent required to comply with Section 409A of the Code, (Bii) execute any employment, deferred compensation or other similar agreement (or any amendment to any such the extent required by an existing agreement, Company Benefit Plan or Law, or (iii) with identified in Section 5.1(h) of the Company Disclosure Schedule;
(i) grant any such directorincrease in the compensation, officerbonus or benefits of directors, employeeofficers, agent employees, consultants, representatives or consultant agents of the Company or any Company Subsidiary, other than at-will employment arrangements entered into increases in the compensation, bonus and benefits of persons who are not directors, executive officers or employees who earn more than $200,000 in annual base salary in the ordinary course of business and consistent with past practice practice;
(j) enter into or materially amend or modify any severance, consulting, retention or employment agreement, plan, program or arrangement, except (i) to the extent required to comply with Section 409A of the Code, (ii) routine changes to welfare plans for 2007, or (iii) to the extent required by an existing Company Benefit Plan, consulting agreement or Law;
(k) settle or compromise any material claim, audit, arbitration, suit, investigation, complaint or other proceeding in an amount in excess of $5 million (except that are terminable at will if a reserve has been established on the balance sheet of the Company for an amount less than the settlement or compromise amount, the Company may settle such claim, audit, arbitration, suit, investigation, complaint or proceeding for an amount up to $5 million in excess of such reserve amount) or enter into any consent decree, injunction or similar restraint or form of equitable relief in settlement of any material claim or audit that would materially restrict the operations of the business after the Effective Time;
(l) (i) make or rescind any material election relating to Taxes, (ii) settle or compromise any material claim relating to Taxes, (iii) make a request for a written ruling of a Taxing Authority relating to material Taxes, (iv) enter into a written and without legally binding agreement with a Taxing Authority relating to material liability to Taxes, (v) except as required by Law, change any of its material methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income tax returns for the taxable year ended December 31, 2006 or (vi) change any material method of accounting or accounting principles or practices by the Company or any Company Subsidiary, except for any such change required by a change in GAAP;
(Cm) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee(i) modify or amend in any materially adverse respect or terminate any Material Contract, agent (ii) enter into any successor agreement to an expiring Material Contract that changes the terms of the expiring Material Contract in a way that is materially adverse to the Company or consultantany Company Subsidiary or, (iii) modify, amend or enter into any new agreement that would have been considered a Material Contract if it were entered into at or prior to the date hereof;
(n) enter into or renew or extend any agreements or arrangements that limit or otherwise restrict the Company or any Company Subsidiary or any of their respective Affiliates or any successor thereto, or that would, after the Effective Time, limit or restrict Parent or any of its Affiliates (including the Surviving Corporation) or any successor thereto, from engaging or competing in any line of business or in any geographic area;
(o) terminate, cancel, amend or modify any insurance policies maintained by it covering the Company or the Company Subsidiaries or their respective properties which is not replaced by a comparable amount of insurance coverage;
(p) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary, ;
(Eq) adopt or establish enter into any new employee benefit plan reinsurance transaction as assuming or ceding insurer (i) which does not contain market cancellation, termination and commutation provisions or (ii) which adversely changes the existing reinsurance profile of the Company and the Company Subsidiaries on a consolidated basis outside of the ordinary course of business;
(r) alter or amend in any material respect any existing employee benefit planunderwriting, claim handling, loss control, investment, actuarial, financial reporting or accounting practices, guidelines or policies (including compliance policies) or any material assumption underlying an actuarial practice or policy, except as necessary to maintain Tax-qualified status may be required by (or, in the reasonable good faith judgment of the Company, advisable under) GAAP, applicable SAP, any Governmental Entity or Tax-favored treatmentapplicable Law, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xxs) agree or commit to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to from the earlier of the termination date of this Agreement until the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Article 9 or the Effective TimeSection 9.01 hereof, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) except as otherwise required contemplated by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):Agreement:
(a) The the businesses of the Company and the Subsidiaries will be conducted only in the ordinary and usual course; the Company Subsidiaries shall (i) conduct their will use its reasonable best efforts to preserve intact its business only organization and goodwill, keep available the services of its officers and employees and maintain satisfactory relationships with suppliers, distributors, customers and others having business relationships with it and the Subsidiaries; and the Company will promptly notify Parent and Newco of any event or occurrence or emergency not in the ordinary and usual course of the business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain of the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts Company or any Subsidiary that are is material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.
(b) Without limiting the generality of the foregoing Section 5.1(a), the Company shall not, and shall not permit any of the Company Subsidiaries to, do any of the following:
(i) other than in ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries Subsidiaries, taken as a whole;
(b) the Company will not (i) amend its articles of incorporation or bylaws or (ii) acquire by merging split, combine or consolidating with reclassify the outstanding Shares or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, stock or property or otherwise with respect to any shares of its capital stockthe Shares;
(vc) 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 (i) the relinquishment of shares by former or current employees and directors of neither the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify nor any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose Subsidiary will issue or agree to the issuance, sale or disposition by the Company or issue any of the Company Subsidiaries, of, any additional shares of, or any options, warrants, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any classclass other than the issuance of shares of capital stock of a Subsidiary to the Company or Subsidiary directly wholly owned by the Company or, with respect to the Company, Shares issuable upon (i) exercise of outstanding stock options, (ii) exercise of outstanding Warrants or any voting securities warrants exercisable for Series B Convertible Preferred Stock or equity interests or any other securities in respect of, in lieu of, or in substitution for any class (iii) conversion of its capital stock, outstanding on the date of this AgreementSeries C Cumulative Convertible Preferred Stock;
(viiid) incur neither the Company nor any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or Subsidiary will enter into a “make well” or similar agree to enter into any new or amended contract or agreement or issue or sell with any debt securities or options, warrants calls or other rights to acquire any debt securities labor unions representing employees of the Company or any Company SubsidiariesSubsidiary;
(ixe) except as required contemplated by Law or in order to replace any key employee whose employment is terminated with Section 5.04 hereto, the Company will not authorize, recommend, propose or a Company Subsidiary after announce an intention to authorize, recommend or propose, or enter into an agreement in principle or an agreement with respect to any merger, consolidation or business combination (other than the date of this Agreement Merger), any acquisition or as required by the provisions disposition of a Company Employee Benefit Plan in effect on material amount of assets or securities (including, without limitation, the date hereof, (Aassets or securities of any Subsidiary) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiarymaterial change in its capitalization, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer orenter, other than in the ordinary course of business consistent with past practice, non-officer employeeinto a material contract or any release or relinquishment of any material contract rights;
(f) except as set forth on Schedule 5.01(f) hereto, agent or consultant, of the Company will not, and will not permit any Subsidiary to, (i) enter into or amend any employment, severance or change-in-control agreement, or any Company Subsidiarybonus, (E) adopt incentive compensation, deferred compensation, profit sharing, retirement, pension, group insurance or establish any new employee other benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status required by law or Tax-favored treatmentregulations, or as expressly provided by this Agreement or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(xii) make any changes in its reporting contribution to any such plan except for Taxes contributions specifically required pursuant to the terms thereof;
(g) the Company will not (i) except as set forth on Schedule 5.01(g) hereto, create, incur or accounting methodsassume any long-term indebtedness for borrowed money (including, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting incomewithout limitation, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations obligations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xicapital leases) settleor, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements except in the ordinary course of business consistent or except to fund out-of-pocket costs incurred in connection with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially hereby, create, incur, assume, maintain or permit to exist any short-term indebtedness for borrowed money in an aggregate amount for the Company and the Subsidiaries as previously disclosed to Parent;
a whole exceeding $250,000; (xiiiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreementexcept as set forth on Schedule 5.01(g), arrangement or commitment that materially limits assume, guarantee, endorse or otherwise materially restricts become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person except wholly-owned Subsidiaries of the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business and consistent with past practice;practices; or (iii) make any loans, advances or capital contributions to, or investments in, any
(xvih) (A) enter into, terminate or amend any Material Contract that is material to neither the Company and nor any Subsidiary shall agree in writing or otherwise to take (i) any action that it is prohibited from taking by this Section 5.01 or (ii) any action that would constitute or is likely to cause or result in a breach in any material respect of any covenant, agreement, or representation or warranty set forth herein. Subject to applicable law, the Company Subsidiaries (taken as a whole)shall, other than (x) Contracts entered into for sales, non-exclusive licenses or services in during the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of period between the date of this Agreement;
(xviii) fail Agreement and the Effective Time, consult with Parent regarding Parent's consideration of alternatives regarding the manner in which to use commercially reasonable efforts to keep in full force best organize and effect all material insurance policies maintained by manage the business of the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to after the Effective Time. Prior Time and other matters relating to transition planning; provided, however, that prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business its operations and operationsnothing contained in this Section 5.01 shall be interpreted to give Parent or Holdings, directly or indirectly, the right to control or direct the operations of the Company and the Subsidiaries prior to the Effective Time.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to between the date of this Agreement and the earlier of the termination of Effective Time and the date, if any, on which this Agreement pursuant is terminated in accordance with Section 7.1, except (A) as prohibited or required by applicable Law, (B) as may be consented to Article 9 or the Effective Time, unless (x) Parent shall otherwise consent in writing by Parent (provided that, in the case of Sections 5.1(h), 5.1(l)(i), 5.1(m)(ii), 5.1(o), 5.1(r), 5.1(s) and 5.1(v), such consent shall not be unreasonably withheld, delayed or conditioned), (yC) otherwise required by applicable Law, or (z) as may be expressly permitted or required pursuant to this Agreement Agreement; or (including D) as set forth on Section 5.1 of the Company Disclosure Letter):
, (ax) The the Company shall, and shall cause each of its Subsidiaries to, conduct the business of the Company and the Company its Subsidiaries shall (i) conduct their business only in all material respects in the ordinary and usual course of business and in a manner consistent with past practicespractice and, (ii) to the extent consistent therewith, use their respective reasonable best efforts to preserve its assets and business organization intact in all material respects and maintain its existing business relations and preserve substantially intact their respective business organizationsgoodwill with customers, to maintain their significant beneficial business relationships with suppliers, contractorslicensors, distributors, customersGovernmental Authorities, licensorsindependent contractors, licensees employees, business partners and others having material business relationships with themit, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.
(by) Without without limiting the generality of the foregoing Section 5.1(aclause (x), the Company shall not, and shall cause each of its Subsidiaries not permit any of the Company Subsidiaries to, do any of the followingdirectly or indirectly:
(ia) other than in ordinary course amend or otherwise change the Certificate of business consistent with past practiceIncorporation or the Bylaws (or such similar organizational or governing documents of any Subsidiary of the Company);
(b) adjust, purchase split, reverse split, combine, subdivide, reclassify, redeem, purchase, repurchase or otherwise acquire, selldirectly or indirectly, leaseor amend the terms of, transfer the Company’s or dispose any of its Subsidiaries’ Securities, including any options, equity or encumber equity-based compensation, warrants, convertible Securities or other rights of any assets, rights or securities kind to acquire any of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholesuch Securities;
(c) issue, sell, pledge, modify, transfer, dispose of, encumber or grant, or authorize the same with respect to, directly or indirectly, any of the Company’s or any of its Subsidiaries’ Securities, including any options, equity or equity-based compensation, warrants, convertible Securities or other rights of any kind to acquire such Securities; provided, however, that the Company may issue shares of Company Common Stock (i) upon the exercise of Company Options outstanding as of the date of this Agreement in accordance with the respective terms of such Company Options (ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion upon the exercise of Warrants outstanding as of the assets ofdate of this Agreement, or (iii) upon the conversion of Company Preferred Stock in accordance with the terms thereof and (iv) pursuant to the automatic exercise of the right to purchase shares of Company Common Stock under the Company ESPP on the last day of any applicable offering period (as modified by any other manner, any business, corporation, partnership, association or other business organization or division thereofand subject to the terms of Section 2.3(c)) from shares of Company Common Stock reserved for issuance under the Company ESPP as of the date of this Agreement;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(ivd) declare, set aside aside, authorize, make or pay any dividend or other distribution payable in cash, capital stock, property or otherwise with respect to the Company’s or any shares of its capital stockSubsidiaries’ Securities, other than ordinary course accretion with respect to the Company Preferred Stock in accordance with the Certificate of Incorporation;
(ve) 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 (i) the relinquishment of shares by former establish, adopt, enter into, materially amend or current employees and directors of the Company 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 payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding existence on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) offer letters that provide for at-will employment without either severance or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
change in control benefits); (ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (Aii) grant or pay, or commit to grant or pay, any bonus, incentive or profit-sharing award or payment, or increase any severance or termination pay the base salary and/or cash bonus opportunity to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, except in each case, (A) as required by applicable Law or under the terms of any Benefit Plan as set forth on Schedule 5.1(e) of the Company Disclosure Letter and in effect as of the date of this Agreement or (B) in the case of increases in annual base salaries and the payment or grant of cash incentive compensation payable to any of its current employees who are not officers, at times and in dollar amounts in the ordinary course of business in connection with the Company’s annual salary review process consistent with past practice; (iii) 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 Subsidiary except as required under the terms of any Benefit Plan in effect as of the date of this Agreement; (iv) enter into, extend, amend or modify, or terminate any employment, severance, termination, change in control, retention, individual consulting or other similar agreement with any current or former director, officer, employee, or consultant of, or individual service provider to, the Company or any of its Subsidiaries (other than severance 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 termination pay consistent with past practice and whose annual base compensation does not exceed $180,000 individually); or (v) communicate with the employees of the Company or any of its Subsidiaries regarding 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 applicable Law;
(f) hire, promote or terminate the employment of (other than for cause, death or disability) any employee (i) at a level of Vice President or higher, (ii) with annual base compensation above $180,000, or (iii) outside the ordinary course of business;
(g) take any action requiring notice to employees, or triggering any other obligations, under the WARN Act or any similar state, local or foreign Law prior to the Closing;
(h) waive, release or limit any restrictive covenant of any current or former employee or independent contractor of the Company or any Subsidiary;
(i) 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 (other than purchases of inventory or supplies in the ordinary course of business consistent with past practice or capital expenditures permitted pursuant to Section 5.1(r)) in, any Person;
(j) forgive any loans or advances to any nonofficers, 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;
(k) 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 property or any interest therein, or all or any material portion of the assets, business or properties of any Person;
(i) sell, pledge, dispose of, transfer, abandon, lease (as lessor), license (except in accordance with Section 5.1(o)) mortgage, incur any Lien (other than Permitted Liens) (including pursuant to a sale-officer employeeleaseback transaction or an asset securitization transaction) on or otherwise transfer or encumber any material portion of the tangible or intangible assets, agent business, any real property or consultant any interest therein, properties or rights of the Company or any of its Subsidiaries except sales of product inventory or disposal of immaterial tangible assets in the ordinary course of business and consistent with past practice, or (Bii) execute enter into any employmentnew line of business or (iii) create any new Subsidiaries;
(m) (i) pay, deferred compensation discharge or satisfy any Indebtedness that has a prepayment cost, “make whole” amount, prepayment penalty or similar obligation (other similar agreement than Indebtedness incurred by the Company or its wholly owned Subsidiaries and solely owed to the Company or its wholly owned Subsidiaries) or (ii) cancel any material Indebtedness (individually or in the aggregate) or settle, waive or amend any material claims or rights;
(n) (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, other than draw-downs pursuant to the Company’s existing revolving loan facility or the payment of annual insurance policy premiums in monthly installments in accordance with past practice, (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 amendment to any such existing agreement) with any such director, officer, employee, agent or consultant debt securities of the Company or any Company Subsidiaryof its Subsidiaries, other than at-will employment arrangements entered into including options, warrants, calls or similar rights, in the ordinary course each case, to acquire any debt securities of business and consistent with past practice that are terminable at will and without material liability to the Company or any of its Subsidiaries;
(o) amend, extend, renew, terminate (other than at its stated termination date) or enter into, or agree to any amendment or modification of, or waive, release or assign any material rights under, any Company SubsidiaryMaterial Contract, (C) increase any Contract that would have been a Company Material Contract or a Lease had it been entered into prior to the benefits payable under date of this Agreement or any existing severanceLease for any Company Leased Real Property, termination pay policies or employment agreementsexcept, (D) increase in the compensation, bonus or other benefits case of any current directorContract of the type described in Sections 3.15(a)(i), executive officer or, other than 3.15(a)(iv) or 3.15(a)(v) (only with respect to the types of Indebtedness specified in clauses (iii) and (v) of the definition of Indebtedness) in the ordinary course of business consistent with past practice; provided, non-officer employeehowever, agent that the foregoing exception shall not apply to any Contract that requires or consultantprovides for consent, acceleration, termination or any other material right or consequence triggered in whole or in part by the Merger or any of the Company other transactions contemplated by this Agreement;
(p) negotiate, amend, modify, extend, enter into or terminate any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit planLabor Agreement, except as necessary required pursuant to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes an applicable Contract in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence effect as of the date of this Agreement;
(xviiiq) fail make any material change to use commercially reasonable efforts its or any of its Subsidiaries’ methods, policies and procedures of accounting, except as required by GAAP or Regulation S-X of the Exchange Act;
(r) make or agree to keep make any capital expenditures exceeding $100,000 in full force and effect all material insurance policies maintained by the aggregate, other than the consignment of Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes products to such policies are made customers in the ordinary course of business;
(xixs) except as permitted under Section 5.1(b)(iagree to, or otherwise commence to, 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 of its Subsidiaries of an amount not greater than $100,000 (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 Section 5.1(b)(ii)its Subsidiaries and their respective properties, make any investment assets and businesses;
(i) sell, transfer, assign, lease, license or otherwise dispose of (whether by contribution of capitalmerger, property transfers, purchase of securities stock or asset sale or otherwise) into any Person any rights to any Company Intellectual Property material to the Company and its Subsidiaries, or loan or advance to, any Person, other than taken as a whole (A) travel and similar advances to its employees, or (B) to a direct or indirect whollyexcept for licensing non-owned Company Subsidiary, in each exclusive rights for the primary purpose of (A) and 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 of its Subsidiaries’ 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) 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 including allowing any such patent families with pending applications to close by not filing a continuing application; (iv) make any change in Company Intellectual Property that is or would reasonably be expected to materially impair the Company’s or any of its Subsidiaries’ rights with respect to the Company Intellectual Property; (v) disclose to any Person (other than Representatives of Parent and Merger Sub), any Trade Secrets, know-how or confidential or proprietary information, except, in the case of confidential or proprietary information, 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;
(i) except as required by applicable Law, make or change any Tax election or adopt or change any method of Tax accounting; (ii) file any amended material Tax Return except in the ordinary course of business; (iii) settle or compromise any audit, assessment or other Proceeding relating to Taxes that could have a material effect on the Company or its Subsidiaries in any taxable period (or portion thereof) starting on or after the Closing Date; (iv) agree to an extension or waiver of the statute of limitations with respect to income or other material Taxes; (v) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) with respect to any Tax; or (vi) surrender any right to claim a Tax refund;
(w) merge or consolidate the Company or any of its Subsidiaries with any Person or adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries; or
(xxx) agree enter into any agreement, contract, commitment or commit arrangement to take do, or adopt any resolutions approving or authorizing, or announce an intention to do, any of the actions precluded by Section 5.1(b)foregoing. Notwithstanding the foregoing (but without limiting the foregoing)Nothing contained herein shall give Parent, nothing in this Agreement is intended to give Parent Merger Sub or Merger Subany of their respective Affiliates, directly or indirectly, the right to control or direct the business Company’s or its Subsidiaries’ operations of prior to the Company Effective Time, and nothing contained herein shall give the Company, directly or indirectly, the Company Subsidiaries at any time right to control or direct Parent’s or its Subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, each of the Company and the Company Subsidiaries Parent shall exercise, consistent with subject to the terms and conditions of this Agreement, complete control and supervision over their own business its and its Subsidiaries’ respective operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. (a) The Company hereby covenants and agrees that, prior to the earlier of the termination of this Agreement pursuant to Article 9 or the Effective Time, unless (x) Parent shall otherwise consent expressly contemplated by this Agreement or consented to in writing (such consent not be unreasonably withheldby Ford, delayed Parent or conditioned)FSG II, (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
(a) The Company will and the Company Subsidiaries shall will cause its subsidiaries to (i) conduct their operate its business only in the usual and ordinary and usual course of business and consistent with past practices, (ii) use their its reasonable best efforts to preserve substantially intact its business organization, maintain its rights and franchises, retain the services of its respective principal officers and key employees and maintain its relationships with its respective principal customers, suppliers and other persons with which it or any of its subsidiaries has significant business relations, (iii) use its reasonable best efforts to maintain and preserve substantially intact their respective business organizationskeep its properties and assets in as good repair and condition as at present, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees ordinary wear and others having material business relationships with themtear excepted, and to retain the services of their present officers and key employees and to comply in all material respects (iv) take no action with all applicable Laws and the requirements of all Contracts that are material respect to the Company and Stock Options that would result in an acceleration of vesting of the Company Subsidiaries, taken as a whole, Stock Options in each case, to connection with the end that their good will execution and ongoing business shall be unimpaired at delivery of this Agreement or the Effective Timeconsummation of any transactions contemplated hereby or otherwise.
(b) Without limiting the generality Except as expressly contemplated by this Agreement and except as set forth in Section 6.01(b) of the foregoing Section 5.1(a)Company Disclosure Schedule, or otherwise consented to in writing by Ford, Parent or FSG II, from the date hereof until the Effective Time, the Company shall notwill not do, and shall will not permit any of the Company Subsidiaries toits subsidiaries to do, do any of the following:
(i) other than (A) increase the compensation payable to or to become payable to any director or executive officer of the Company, except for increases in salary, wages or bonuses payable or to become payable in the ordinary course of business and consistent with past practice; (B) grant any severance or termination pay (other than pursuant to existing severance arrangements or policies as in effect on the date of this Agreement) to, purchase or otherwise acquireenter into any employment or severance agreement with, sell, lease, transfer any director or dispose of or encumber any assets, rights or securities executive officer of the Company and Company; or (C) adopt, amend or terminate any employee benefit plan or arrangement affecting any director or executive officer of the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken Company, except as a wholemay be required by applicable law;
(ii) declare or pay any dividend on, or make any other distribution in respect of outstanding shares of its capital stock except for regular quarterly dividends payable on the Common Stock in an amount not to exceed $0.05 per quarter, provided that the foregoing shall not prohibit dividends or distributions between or among the Company and its subsidiaries;
(iii) (A) redeem, repurchase or otherwise reacquire any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its or its subsidiaries' capital stock; (B) effect any reorganization or recapitalization of the Company; or (C) split, combine or reclassify any of the Company's 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;
(iv) (A) issue, deliver, award, grant or sell, or authorize or propose the issuance, delivery, award, grant or sale (including the grant of any security interest, pledge, mortgage, lien, charge, adverse claim of ownership or use, or other encumbrance of any kind) of, any shares of stock of the Company (including shares held in treasury), any securities convertible into or exercisable or exchangeable for any such shares, or any rights, warrants or options to acquire any such shares (except for the issuance of shares upon the exercise of Company Stock Options outstanding on the date of this Agreement); or (B) amend or otherwise modify the terms of any such rights, warrants or options the effect of which shall be to make such terms more favorable to the holders thereof;
(v) acquire or agree to acquire, by merging or consolidating with or with, by purchasing all or a substantial an equity interest in or a substantial portion of the assets of, of or by any other manner, any business, business or any corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, property thereof or otherwise with respect to any shares of its capital stock;
(v) purchase, redeem acquire 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 agree to acquire any such stock, securities or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights assets of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money person (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities the purchase of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant assets in the ordinary course of business and consistent with past practice), (B) execute any employment, deferred compensation or other similar agreement (or any amendment except that the foregoing restrictions shall not apply to any such existing agreementaction by the Company that would not require the approval of the Board under the Board policy set forth in Section 6.01(b) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencyDisclosure Schedule;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiiivi) make or commit to make any capital expenditures expenditures, except that the foregoing restrictions shall not apply to any action by the Company that would not require the approval of the Board under the Board policy set forth in excess Section 6.01(b) of $200,000 in the aggregateCompany Disclosure Schedule;
(xivvii) enter into any agreementsell, arrangement or commitment that materially limits lease, exchange, mortgage, pledge, transfer, license or otherwise materially restricts the Company dispose of or encumber, or agree to sell, lease, exchange, mortgage, pledge, transfer, license or otherwise dispose of or encumber, any of its material assets or any Company Subsidiarymaterial assets of any of its subsidiaries, measured on a consolidated basis with the Company, or that would reasonably be expected toany substantial right therein;
(viii) propose or adopt any amendments to its Restated Certificate of Incorporation or its By-laws;
(A) change any of its methods of accounting in effect at December 31, after the Effective Time1999, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing (B) write down in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon amount the default value of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control intangible assets of the Company or (C) release make or rescind any Person from prior express or deemed election relating to its expirationfederal income taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to federal income taxes, or modify change any of its methods of reporting income or waive any provision ofdeductions for federal income tax purposes from those employed in the preparation of the federal income tax returns for the taxable year ending December 31, any confidentiality1999, standstill except as may be required by applicable law or similar agreement in connection with the Company’s review of strategic alternativesgenerally accepted accounting principles;
(xviix) create incur any Company Subsidiary, obligation for borrowed money other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiariespurchase money indebtedness, unless: (x) such policies are simultaneously replaced whether or not evidenced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed note, bond, debenture or replaced); or (z) changes to such policies are made similar instrument, except in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance toprepay, before the scheduled maturity thereof, any Person, other than (A) travel and similar advances to of its employees, or (B) to a direct or indirect whollylong-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessterm debt; or
(xxxi) agree in writing or commit otherwise to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Samples: Merger Agreement (Hertz Corp)
Conduct of Business by the Company Pending the Merger. The Company covenants Except as otherwise expressly contemplated by this Agreement or as set forth in the Disclosure Schedule or as required by applicable law and agrees thatexcept as contemplated by the Company’s annual or capital budget (including the right to substitute projects of substantially similar characteristics) provided to Parent, prior 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 9 Agreement, or (ii) the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
(a) The Company and the Company Subsidiaries shall (i) conduct their business only in the ordinary and usual course of business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with themshall, and to retain the services shall cause each of their present officers and key employees and to comply its Subsidiaries to, in all material respects carry on its business in the regular and ordinary course consistent with all applicable Laws past practice and use its commercially reasonable efforts to preserve intact its current business organization, keep available the requirements services of all Contracts that are material to the Company its current officers and the Company Subsidiariesemployees and preserve its relationships with customers, taken as a whole, in each case, to the end that their good will suppliers and ongoing others having business shall be unimpaired at the Effective Time.
(b) dealings with it. Without limiting the generality of the foregoing foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in Section 5.1(a)5.1 of the Disclosure Schedule or as required by applicable law, and subject to the provisions of Section 6.5 and Article VIII, the Company shall not, and shall cause each of its Subsidiaries not permit to, without the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed (except with respect to subsections (b) and (h) hereof for which Parent may withhold its consent in its sole and absolute discretion)):
(a) (x) split, combine or reclassify its outstanding shares of capital stock, (y) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any shares of its capital stock, other than (i) dividends and distributions by a Subsidiary of the Company Subsidiaries toto its parent and (ii) regular cash dividends paid by the Company to its stockholders semi-annually in accordance with its customary practice in an amount not to exceed $0.125 per share of Common Stock per semi-annual payment of such dividends, do or (z) repurchase, redeem or otherwise acquire any shares of its capital stock or any other securities convertible into or exchangeable or exercisable for any shares of its capital stock, provided that (A) the Company may acquire Options (including shares used to satisfy the exercise price thereof), Restricted Stock and Performance Shares upon their exercise or settlement and (B) each wholly-owned Subsidiary of the following:Company may repurchase, redeem or otherwise acquire shares of its capital stock or securities convertible into or exchangeable or exercisable for any shares of its capital stock;
(b) (x) issue, deliver, sell, grant, pledge or dispose of, or authorize or propose to issue, deliver, sell, grant, pledge or dispose of, any shares of its capital stock or any securities convertible into or exchangeable for, or any rights, warrants or options to acquire, any such shares (other than the issuance of shares of Common Stock pursuant to Options, Restricted Stock and Performance Share Awards outstanding as of the date hereof) and (y) except as contemplated by this Agreement, amend, waive or otherwise modify the terms of any such rights, warrants or options;
(c) amend the Articles of Organization or By-Laws or other organizational documents of the Company or its Subsidiaries;
(d) merge or consolidate with any other Person, except for (i) other than any such transactions between wholly owned Subsidiaries of the Company or between the Company and any of its wholly owned Subsidiaries, provided that the Company is the surviving entity, and (ii) acquisitions and dispositions permitted by clauses (e) and (f) below, respectively, effected by means of a merger or consolidation involving the Company or any of its Subsidiaries;
(e) make any acquisition or agree to make any acquisition, except for purchases of inventory, raw materials or supplies in the ordinary course of business substantially consistent with past practice, by merger or otherwise, of any business, assets or equity securities involving the payment of consideration in excess of $2,500,000 individually and $7,000,000 in the aggregate (valuing any non-cash consideration at its fair market value as of the date of the agreement of the acquisition);
(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 $2,500,000 individually and $7,000,000 in the aggregate, except sales of inventory or obsolete assets in the ordinary course of business substantially consistent with past practice;
(g) except in the ordinary course of business and upon terms not materially adverse to the Company and its Subsidiaries with respect to such Material Contract, or as required under the terms of a Material Contract, enter into, amend or otherwise modify in any material respect any Material Contract;
(h) except for borrowings under the existing credit facilities, letters of credit entered into in the ordinary course of business consistent with past practice and trade payables incurred in the ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former create, incur or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur assume any indebtedness for borrowed money (other than trade payablesindebtedness in replacement of the existing credit facilities on substantially similar terms and for borrowings not to exceed the maximum borrowings under the existing credit facilities), (ii) or guarantee any such indebtedness or enter into a “make well” or similar agreement 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, (iii) guarantee any obligations of another Person (other than the Company or any of its Subsidiaries);
(ixi) except as required by Law or in order make any loans, advances (other than advances to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant employees of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant of its Subsidiaries in the ordinary course of business and consistent with past practice) or capital contributions to, (B) execute or investments in, any employment, deferred compensation or other similar agreement (or any amendment Person other than to any such existing agreementof the Company’s Subsidiaries;
(j) with pledge, encumber or otherwise subject to a Lien (other than a Permitted Lien) any such director, officer, employee, agent material asset or consultant property of the Company or any material portion of the Company’s assets or properties;
(k) except as may be required as a result of a change in regulatory accounting standards and 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 Subsidiary, other than at-will employment arrangements entered into and its Subsidiaries;
(l) except in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to or as listed in Section 5.1(l) of the Disclosure Schedule, settle or compromise any 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 $1,000,000 individually and $5,000,000 in the aggregate;
(m) pay, discharge or satisfy any material claims, liabilities or obligations other than (x) the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in the Company SubsidiaryFinancial Statements (or as contemplated by the notes thereto) or incurred in the ordinary course of business substantially consistent with past practice, in all cases not more than $2,500,000 individually and $7,000,000 in the aggregate and (Cy) payment of Taxes as they become due and payment of trade payables incurred in the ordinary course of business;
(n) except as set forth in Section 5.1(n) of the Disclosure Schedule, terminate, establish, adopt, enter into, make any new grants or awards of stock based compensation or other benefits under, amend or otherwise modify, any Company Stock Plans or Employee Benefit Plans (including the Deferred Compensation Plan and Retention Bonus Plan) or increase the benefits payable under any existing severancesalary, termination pay policies or employment agreements, (D) increase the compensationwage, bonus or other benefits compensation of any current directordirectors, executive officer orofficers or key employees except (i) increases in base salary in connection with annual performance and salary reviews or upon promotion in the ordinary course of business substantially consistent with past practice; or (ii) to the extent required by the terms of any of the Employee Benefit Plans, other than Company Stock Plans or Material Employment Agreements existing as of the date of this Agreement;
(o) (x) change its material (A) Tax accounting policies, practices, or (B) annual accounting period or (C) Tax elections, (y) settle any material audits, examinations or litigation with respect to Taxes, except, in each case, as may be required by U.S. GAAP, or (z) file any material amended Tax Return, enter into any closing agreement with respect to material Taxes, or surrender any right to claim a material refund of Taxes; and
(p) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company or any Subsidiary of the Company;
(q) implement any layoff of employees that would implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended;
(r) make or agree to make any new capital expenditures in excess of 120% of the aggregate amounts reflected in the capital expenditure budgets for the year in which such capital expenditures are made, which budgets have been made available or provided to Parent prior to the date hereof, except for capital expenditures expressly required under the terms of any Material Contract;
(s) except in the ordinary course of business consistent with past practice, non-officer employeetransfer, agent sell, license (except in connection with potential licensing arrangements currently under negotiation with third parties), grant a security interest in, or consultantotherwise encumber, any intellectual property of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatmentof its Subsidiaries, or (F) provide abandon or allow to lapse or expire any material benefit to a current registration or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides application for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessintellectual property; or
(xxt) agree in writing, or commit otherwise, to take any of the actions precluded by Section 5.1(b)foregoing actions. Notwithstanding the foregoing (but without limiting the foregoing), nothing any provision contained in this Agreement Agreement, action taken by the Company and its Subsidiaries which is intended to give Parent permitted under this Section 5.1 shall not constitute a misrepresentation or Merger Sub, directly breach of warranty or indirectly, covenant. The Company shall have the right to control or direct update the business or operations of Disclosure Schedule hereto between the Company or the Company Subsidiaries at any time prior to date hereof and the Effective Time. Prior Time to the Effective Time, reflect actions taken by the Company and the Company its Subsidiaries shall exercise, consistent with the terms and conditions of which are permitted to be taken pursuant to this Agreement, complete control and supervision over their own business and operationsSection 5.1.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to between the earlier of the termination date of this Agreement pursuant to Article 9 or and the Effective Time, unless except (w) to the extent required or prohibited by applicable Law, (x) as otherwise contemplated by this Agreement, (y) to the extent Parent shall otherwise consent agrees in writing (such consent not to be unreasonably withheld, delayed conditioned or conditioneddelayed), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including as set forth in Section 5.1 5.01 of the Company Disclosure Letter):
, (a) The the businesses of the Company and the Company Subsidiaries shall (i) conduct their business be conducted, in all material respect, only in the ordinary and usual course of business and consistent with past practicespractice, (iib) the Company shall use their respective its commercially reasonable best efforts to maintain and preserve substantially intact their respective the business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services organization of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company SubsidiariesSubsidiaries and to keep available the services of the current officers and employees of the Company and the Company Subsidiaries and (c) neither the Company nor any Company Subsidiary shall, taken as a whole, in each case, to between the end that their good will date of this Agreement and ongoing business shall be unimpaired at the Effective Time.
(b) Without limiting the generality of the foregoing Section 5.1(a), the Company shall not, and shall not permit any of the Company Subsidiaries todirectly or indirectly, do any of the following:
(i) amend its Certificate of Incorporation or By-laws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any shares of any class of capital stock of the Company or any Company Subsidiary, or any options, warrants, convertible securities or other than rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including any phantom interest), of the Company or any Company Subsidiary (excluding sales or other dispositions of Company Common Stock by the administrator under and pursuant to the terms of either of the Company’s 2007 Employee Stock Purchase Plan (the “ESPP”) or the Company’s 401(k) Plan and the issuance of phantom stock interests under the Company’s 2003 Non-Employee Director Deferred Compensation Plan substantially consistent with past practice as disclosed in the Proxy Statement on Schedule 14A relating to the Company’s 2009 annual meeting of stockholders filed by the Company with the SEC on March 24, 2009) or (B) except in the ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities assets of the Company and the or any Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereofSubsidiary;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside aside, make or pay any dividend or other distribution distribution, payable in cash, capital stock, property or otherwise otherwise, with respect to any of its capital stock, except for (A) dividends by any direct or indirect wholly owned Company Subsidiary to the Company or any other Company Subsidiary and (B) one cash dividend on shares of Company Common Stock in an amount not to exceed $0.50 per share of Company Common Stock;
(iv) reclassify, combine, split, subdivide or redeem, or (other than any purchase or acquisition pursuant to the terms of the ESPP or the Company’s 401(k) Plan) purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(v) purchase(A) increase the compensation payable or to become payable or the benefits provided to, redeem grant any retention, severance or otherwise acquire, or offer termination pay 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” any employment bonus, change in control or similar severance agreement with, its current or issue former directors, officers or sell any debt securities employees (except (x) increases in the ordinary course of business consistent with past practice in salaries, wages, bonuses, incentives or options, warrants calls or other rights to acquire any debt securities benefits of employees of the Company or any Company Subsidiaries;
Subsidiary who are not directors or executive officers of the Company, (ixy) except as required with respect to individuals who are first employed by Law or in order to replace any key employee whose employment is terminated with the Company or a any Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereofhereof and (z) for bonuses and retention, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay payments in an aggregate amount not to any non-officer employeeexceed $5,000,000.00), agent or consultant in the ordinary course of business and consistent with past practice, (B) execute establish, adopt, enter into, terminate or amend any employmentcollective bargaining plan, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under grant any existing severance, termination pay policies or employment agreements, equity based awards;
(Dvi) increase the compensation, bonus or other benefits of take any current director, executive officer oraction, other than in the ordinary course of business consistent with past practice, non-officer employee, agent with respect to accounting policies or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit planprocedures, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement changes in GAAP or employee benefit plan.relevant statutory accounting principles;
(xvii) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its , Tax return or method of reporting incomeTax accounting, deductions, or other Tax items for Tax purposes; settle or compromise any material Tax liability liability, consent to any material claim or enter into any transaction with an Affiliate outside the ordinary course of business if such transaction would give rise assessment relating to a material tax liability; Taxes, or waive any statute of limitations in respect of a material amount of Taxes or right agree to any extension of time with respect to a Tax an assessment or deficiency;
deficiency for a material amount of Taxes (xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material than pursuant to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess extensions of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements time to file Tax returns obtained in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent);
(xiiiviii) make amend, modify or commit consent to make capital expenditures in excess the termination of $200,000 in any Material Contract, or amend, waive, modify or consent to the aggregate;
(xiv) enter into termination of any agreement, arrangement or commitment that materially limits or otherwise materially restricts material rights of the Company or any Company SubsidiarySubsidiary thereunder, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the each case other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease than in the ordinary course of business consistent with past practice;practice or other than as would not constitute a Material Adverse Effect; or
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (Bix) enter into any Contract with any third party that grants such third party any material rights upon legally binding agreement or otherwise make a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior commitment to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants (a) From and agrees that, after the date hereof and prior to the Effective Time or the earlier of the termination of this Agreement, except (i) with the prior written consent of Parent, (ii) as required by applicable Law, (iii) as contemplated by this Agreement pursuant or (iv) as otherwise set forth in Section 5.1 of the Company Disclosure Schedule, the Company shall, and shall cause its Subsidiaries to, carry on its business in the usual, regular and ordinary course in substantially the same manner as previously conducted and use commercially reasonable efforts to Article 9 preserve its business organization intact in all material respects and maintain relations in all material respects with its employees, unions, key customers and suppliers 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 Effective Timeearlier termination of this Agreement, unless except (xi) with the prior written consent of Parent shall otherwise (which consent in writing the case of clauses (such consent viii), (xii), (xiii), (xiv), (xvi) and (xxi) shall not be unreasonably withheld, delayed or conditioned), (yii) otherwise as required by applicable Law, or (ziii) as expressly permitted or required pursuant to contemplated by this Agreement (including Section 5.1 5.2), or (iv) as otherwise set forth in Section 5.1(b) of the Company Disclosure Letter):
(a) The Company and the Company Subsidiaries shall (i) conduct their business only in the ordinary and usual course of business and consistent with past practices, (ii) use their respective reasonable best efforts to maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.
(b) Without limiting the generality of the foregoing Section 5.1(a)Schedule, the Company shall not, and shall not permit any of the Company its Subsidiaries to, do any of the following:
(i) declare, set aside, make, establish a record date in respect of, accrue or pay any dividends on, or make any other than distributions in respect of, any of its capital stock or equity interests, whether payable in cash, stock, property or otherwise, except for (A) dividends or distributions by a Subsidiary of the Company to the Company or to another Subsidiary of the Company, and (B) regular quarterly cash dividends or distributions of the Company made in the ordinary course of business course, consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholewhich shall be no greater than $0.09 per Share per quarter;
(ii) other than in the case of wholly owned Subsidiaries, adjust, recapitalize, split, combine, subdivide, redeem, offer to redeem, purchase, repurchase, reclassify or otherwise acquire, directly or indirectly, any of its capital stock or equity interests;
(iii) (1) issue, deliver, sell, pledge, grant, transfer, authorize, dispose of, or otherwise encumber any shares of its capital stock, other equity or voting securities, any securities convertible into or exchangeable for, or any option, warrant or other right to acquire or receive any shares of its capital stock, other equity or voting securities or convertible or exchangeable securities, or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units, or (2) redeem, purchase or otherwise acquire any shares of its capital stock or other equity or voting securities, other than, in each case, (A) in connection with the exercise, vesting or settlement, as applicable, of Company Equity Awards that are outstanding on the date hereof in accordance with their terms as in effect on the date hereof, including with respect to the satisfaction of Tax withholding and, with respect to Company Stock Options, the payment of the exercise price, (B) the issuance by any Subsidiary of the Company of any shares of capital stock or equity interests of such Subsidiary to the Company or any Subsidiary of the Company, and (C) the grant of any Liens to secure obligations of the Company or any of its Subsidiaries in respect of any indebtedness permitted under clause (ix) below;
(iv) (A) amend the certificate of incorporation or bylaws of the Company or amend in any material respects other similar organizational documents of any of its Subsidiaries or (B) form any new Subsidiaries;
(v) form any joint venture or partnership, or acquire or agree to acquire, directly or indirectly, in a single transaction or a series of related transactions, whether by merging or consolidating with with, or by purchasing all or a substantial equity interest interests in or a substantial portion of the assets of, or by any other manner, any business, assets of any business or any corporation, partnership, limited liability company, joint venture, association or other business organization or division thereof;
thereof or any other Person (iii) amend or propose to amend other than the Company Charter Documents or, in the case or a Subsidiary of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of OptionsCompany);
(vi) splitmake any loans, combineadvances or capital contributions to, subdivide or reclassify investments in, any capital stockother Person (other than the Company or any of its Subsidiaries), other than in the ordinary course of business in an amount not exceeding $1 million in the aggregate, or in transactions among Subsidiaries of the Company;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grantlease (as lessor), dispose of, pledge license (as licensor) or otherwise transfer (including through any “spin-off”), or pledge, encumber or authorizeotherwise subject to any Lien (other than a Permitted Lien), propose any of its properties or agree assets except (i) sales or other dispositions of inventory or excess or obsolete properties or assets in the ordinary course of business, (ii) pursuant to the issuance, sale or disposition by Contracts to which the Company or any of its Subsidiaries is a party made available to Parent and in effect prior to the Company Subsidiaries, of, any shares ofdate hereof or entered into as permitted by this Section 5.1, or any options, warrants, calls, commitments (iii) properties or rights assets having a fair market value of any kind less than $1 million individually or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities $5 million in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreementaggregate;
(viii) incur enter into, amend in any material respect, renew, voluntarily terminate (other than by expiration) or grant any release or relinquishment of any material rights under, any Material Contract (or any Contract that would be a Material Contract if entered into prior to the date hereof), other than (a) by automatic extension, termination or renewal (including if deemed an amendment or modification of any such Contract), (b) a termination due to an uncured breach by a counterparty to such Contract, or (c) in the ordinary course of business;
(ix) subject to Section 5.17, create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money (other than trade payablesincluding under the Existing Credit Facilities) or assume, guarantee or endorse, or otherwise as an accommodation become responsible for any such indebtedness or enter into a “make well” or similar agreement of any other Person, or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities, guarantee any debt securities of another Person, enter into any “keep well” or other arrangements to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, in each case, other than (A) indebtedness solely among the Company and its Subsidiaries or among its Subsidiaries, (B) amounts outstanding or available to be drawn under the Existing Credit Facilities (without giving effect to any amendments after the date hereof increasing the aggregate amount of indebtedness outstanding or available to be drawn thereunder), or (C) under short-term debt or overdraft facilities, in each case as refinanced, replaced, amended or renewed on substantially similar terms from time to time not in excess of $2 million in aggregate principal amount outstanding at any one time (any indebtedness referenced in clause (C), the “Specified Indebtedness”);
(x) merge or consolidate the Company or any of its Subsidiaries with and into any other Person other than, in the case of any Subsidiary of the Company, to effect any acquisition or any disposition permitted by this Section 5.1(b) and other than transactions among Subsidiaries of the Company;
(xi) adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring or recapitalization;
(xii) amend in any material respect, cancel or terminate any material insurance policy naming the Company or any of its Subsidiaries as an insured, a beneficiary or a loss payable payee without obtaining comparable substitute insurance coverage;
(xiii) pay, discharge, satisfy, settle or compromise or agree to settle any pending or threatened Action or other claims, liabilities or obligations relating to a pending or threatened Action other than any such payment, discharge, satisfaction, settlement or compromise of an Action or claim solely for money damages for an amount in excess of $1 million in the aggregate (excluding amounts to be paid under existing Insurance Policies or renewals thereof);
(xiv) except as required by the terms of any Company Benefit Plan or collective bargaining agreements or other Contracts with labor unions or employee representative bodies as in effect on the date hereof that have been disclosed to Parent Holdco or Parent in writing, or as required by applicable Law, (A) increase the compensation or benefits of any current or former officer, director, employee or other individual service provider of the Company or any Company of its Subsidiaries;
, except for (ixx) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any increases for non-officer employee, agent or consultant employees in base salary in the ordinary course of business that do not exceed, for any such employee a 3% increase in any one (1) calendar year and (y) increases in compensation made in connection with non-officer employee promotions in the ordinary course and consistent with past practice, (B) execute adopt any employmentnew employee benefit plan or arrangement (including any arrangement that would be a Company Benefit Plan if it were in effect on the date hereof) or amend, deferred compensation modify or other similar agreement (or terminate any amendment to any such existing agreement) with any such directorCompany Benefit Plan, officer, employee, agent or consultant of the Company or any Company Subsidiaryin each case, other than at-will employment arrangements (agreements that are entered into in the ordinary course of business with newly hired employees that do not provide for severance benefits in excess of those provided for in the Company Severance Policy), (C) subject to section (A) of this clause (xiv), hire, engage, promote or terminate the employment or engagement of (other than for cause, death or disability) any officer, director, employee or other individual service provider who earns (or will earn or did earn) annual base compensation in excess of $200,000, (D) take any action to accelerate the vesting or payment, or the funding of any payment or benefit under, any Company Benefit Plan, (E) enter into, amend, extend or terminate any collective bargaining agreement or other Contract with a labor union or other employee representative body, or (F) change the terms of its participation in, or withdraw from, any Multiemployer Plan;
(xv) make any material change in financial accounting methods, principles or practices of the Company or any of its Subsidiaries, except insofar as may be required by GAAP (or any authoritative interpretation or enforcement thereof), or applicable Law, in each case, as agreed to by the Company’s outside auditors;
(xvi) authorize, commit to or make any capital expenditures in excess of 100% of the Company’s capital expenditure budget in effect on the date hereof allocable for each calendar quarter in the period beginning on the date of this Agreement and consistent ending on the Effective Time (provided, that if the Effective Time does not occur prior to December 31, 2019, the capital expenditure budget for the period beginning on January 1, 2020 until the Effective Time shall be based on the same capital expenditure budget in effect on the date hereof), and in connection with past practice the foregoing, the Company shall provide Parent with reasonable information on a monthly basis regarding the Company’s capital expenditures during such period;
(xvii) enter into a new line of business that are terminable at will is material to the Company and without its Subsidiaries taken as a whole;
(xviii) other than in the ordinary course of business (A) make or change any material liability Tax election or adopt or change any material method of Tax accounting, (B) file any material amended Tax Return, (C) settle or compromise any audit, assessment or other proceeding relating to a material amount of Taxes, (D) agree to an extension or waiver of the statute of limitations with respect to material Taxes, (E) 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, or (F) surrender any right to claim a material Tax refund;
(xix) (A) abandon, cancel, fail to renew or permit to lapse (i) any material Company Intellectual Property owned by, or purported to be owned by, the Company or (ii) any material in-licensed Intellectual Property to the extent that the Company or its Subsidiaries have the right to take or cause to be taken such action pursuant to the terms of the applicable Contract under which such Intellectual Property is licensed to the Company or any Company Subsidiaryits Subsidiaries or (B) sell, transfer, license or otherwise encumber (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than a Permitted Lien) any material Company Intellectual Property;
(xx) license or otherwise dispose of the rights to use any Intellectual Property (other than customer agreements entered into in the ordinary course of business consistent with past practice, non-officer employee, agent practices) or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any disclose material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit trade secrets to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) third party other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors pursuant to a non-disclosure or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parentconfidentiality agreement;
(xiiixxi) make terminate, amend, renew, enter into or commit extend any Lease or waive any rights thereunder, or acquire any ownership interest in real property or enter into any Contracts to make capital expenditures acquire any ownership interest in excess of real property, in each case, with aggregate liabilities exceeding $200,000 1 million, individually, or $5 million, in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of businessper annum; or
(xxxxii) agree to take or commit make any commitment to take any of the foregoing actions precluded that are prohibited by this Section 5.1(b). .
(c) Notwithstanding anything else contained in this Section 5.1, the foregoing Company and its Subsidiaries may take commercially reasonable actions that would otherwise be prohibited by Sections 5.1(b)(viii) or (but without limiting xvi) (or Section 5.1(b)(xxii) as it relates thereto) solely to the foregoingextent such action is necessary to prevent the occurrence of, or mitigate the existence of, emergency situations or as may be reasonably necessary to address (i) immediate risks to human health or (ii) material damage to the environment, material equipment or other material assets of the Company or any of its Subsidiaries, provided that the Company shall (x) if reasonably practicable, provide Parent with notice thereof and request Parent’s reasonable consent and cooperate in good faith in determining a response or (y) if not reasonably practicable, promptly inform Parent of any such actions; provided, further, that with respect to Section 5.1(b)(viii), nothing that such Material Contract is entered into or amended on commercially reasonable terms, taking into account the circumstances under which it is agreed.
(d) Nothing contained in this Agreement is intended to shall give Parent Holdco, Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company any of its Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business its and its Subsidiaries’ respective operations, subject to the terms of Section 5.1.
Appears in 1 contract
Samples: Merger Agreement (Global Brass & Copper Holdings, Inc.)
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to During the earlier of period from the termination date of this Agreement pursuant to Article 9 or until the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) except as expressly permitted or required pursuant to by this Agreement (including or as set forth on Section 5.1 5.1(a) of the Company Disclosure Letter):
(a) The Company and Schedules or as Buyer otherwise agrees in writing, the Company will and will cause each of its Subsidiaries shall (i) conduct their to carry on its business only in the ordinary and usual course of business and consistent with past practicespractice and, (ii) to the extent consistent therewith, use their respective reasonable best efforts to preserve its business organization intact, maintain in full force and preserve substantially intact their respective business organizationseffect the Company Permits and maintain its existing relations and goodwill with Governmental Entities, to maintain their significant beneficial business relationships with customers, suppliers, contractors, distributors, customerscreditors, lessors, licensors, licensees and others having material business relationships with themlicensees, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, business associates to the end that their good will goodwill and ongoing business shall businesses will not be unimpaired impaired in any material respect at the Effective Time.
(b) . Without limiting the generality of the foregoing foregoing, and except (i) as otherwise expressly permitted by this Agreement, (ii) as contemplated by the Confidential Evaluation Material, dated March 2006, previously provided by the Company to Buyer (the “CEM”), except as otherwise set forth below in this Section 5.1(a), or (iii) as set forth on Section 5.1(a) of the Company shall Disclosure Schedules, during the period from the date of this Agreement to the Effective Time, the Company will not, and shall will not permit any of the Company its Subsidiaries to, do without the prior written consent of Buyer (which consent will not be unreasonably withheld or delayed), take any of the followingfollowing actions:
(i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its Capital Stock, other than in ordinary course of business consistent with past practice, purchase (1) dividends and distributions by a direct or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities indirect Subsidiary of the Company to its parent and (2) regular quarterly cash dividends and distributions with respect to the Company Common Stock, not to exceed $0.24 per share of Company Common Stock per quarter, and otherwise in accordance with the Company’s dividend policy as set forth on Section 5.1(a)(i)(A)(2) of the Company Disclosure Schedules (regardless of any assumptions regarding dividends set forth in the CEM), with record dates and payment dates consistent with the Company’s past dividend practice, (B) 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 its Capital Stock or (C) purchase, redeem or otherwise acquire any Capital Stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any Capital Stock or other securities thereof, other than purchases of shares of Company Common Stock for issuance to participants in the Company DRIP and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholeEmployee Savings Plan;
(ii) issue, deliver, pledge, encumber, sell, dispose of or grant (A) any of its Capital Stock or any Capital Stock in any of its Subsidiaries, (B) any Company Voting Debt, Company Stock Equivalents or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any Capital Stock referred to in clause (A), Company Voting Debt, Company Stock Equivalents, voting securities or convertible or exchangeable securities or (D) any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units, other than (1) the issuance of Company Common Stock upon the exercise or conversion of awards made under the Company Stock Plans that are outstanding on the date of this Agreement and in accordance with their present terms, upon the exercise or conversion of awards granted under the Company Stock Plans awarded in accordance with Section 5.1(a)(ii)(D)(2) or pursuant to the terms of any Compensation Commitment as in effect on the date of this Agreement or as amended in accordance with or as permitted by this Agreement, (2) issuances by a direct or indirect Subsidiary of the Company of its Capital Stock to its parent, (3) the reissuance of shares of Company Common Stock that have been purchased in accordance with Section 5.1(a)(i)(C) pursuant to the Company DRIP and the Company Employee Savings Plan or (4) the annual issuance of 8,000 shares (in the aggregate) of Company Common Stock in accordance with Section 6.1 of the 2000 Director Stock Award Plan (as amended), as in effect on the date hereof.
(iii) amend the Company’s Articles of Incorporation or bylaws;
(iv) (A) acquire or agree to acquire by merging or consolidating with with, or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, business or any corporation, partnership, joint venture, association or other business organization or division thereof;
, (iiiB) amend acquire or propose agree to amend the Company Charter Documents oracquire any assets, other than in the case ordinary course of business consistent with past practice or pursuant to capital expenditures made in accordance with Section 5.1(a)(ix) or (C) make any investment in the Capital Stock of, or other instrument convertible into or exchangeable for the Capital Stock of, any other Person (other than direct or indirect Subsidiaries of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) declare, set aside that are direct or pay any dividend or other distribution payable in cash, capital stock, property or otherwise with respect to any shares indirect Subsidiaries of its capital stockthe Company as of the date hereof);
(v) purchaseexcept to the extent required by applicable law or by the terms of any Benefit Plan maintained by the Company, redeem Compensation Commitment or otherwise acquirecollective bargaining agreement in effect as of the date of this Agreement, (A) grant to any current or offer to purchaseformer employee, redeem officer 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 (i) the relinquishment of shares by former or current employees and directors director of the Company or any of its Subsidiaries any increase in payment compensation or benefits or new incentive compensation grants except in the ordinary course of withholding tax upon business consistent with past practice (including annual salary and compensation increases in respect of any fiscal year regardless of when such increases were approved), provided that such compensation and benefits increases, in the vesting aggregate, do not result in an increase of Restricted Stock more than 5% when compared to the prior year (excluding the effect of increases due to actuarial assumptions), (B) grant to any current or former employee, officer or director of the Company or any of its Subsidiaries any increase in severance, pay to stay or termination pay except to the extent consistent with past practice and Restricted Stock Units that, in the aggregate, does not result in a material increase in benefits or compensation expenses, (C) enter into or amend any Compensation Commitment with any such current or former employee, officer or director, (D) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Benefit Plan, except with respect to any Benefit Plan maintained by the Company that is a Qualified Plan, as may be required to facilitate or obtain a determination from the IRS that such Benefit Plan is a Qualified Plan or (iiE) take or permit to be taken any action to accelerate any rights or benefits or the cashless funding thereof, or net exercise make or permit to be made any material determinations not in the ordinary course of Optionsbusiness consistent with past practice, under any collective bargaining agreement, Benefit Plan or Compensation Commitment; provided, however, that notwithstanding anything in this Section 5.1(a)(v) to the contrary, the foregoing will not restrict the Company or its Subsidiaries from entering into or making available to newly hired officers, or employees hired to fill existing positions or up to ten newly created positions, or to officers or employees in the context of promotions based on job performance or workplace requirements in the ordinary course of business consistent with past practice, plans, agreements (except employment, severance or change of control agreements), benefits and compensation arrangements (excluding equity grants) that have, consistent with past practice, been made available to newly hired or promoted officers or employees;
(vi) splitmake any material change in accounting methods, combineprinciples or practices except as required by GAAP, subdivide by regulatory authorities of competent jurisdiction or reclassify any capital stockby law;
(vii) except for sell, lease (as lessor), license or otherwise dispose of or subject to any Lien (other than Liens as required by after acquired property covenants in Contracts evidencing Company Indebtedness and Liens created in connection with the issuance refinancing of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior Company Indebtedness in accordance with Section 5.1(a)(viii) that are no less favorable to the execution of this AgreementCompany and its Subsidiaries than those Liens that were created in connection with the Company Indebtedness that is being refinanced) any properties or assets that are material, issueindividually or in the aggregate, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company and its Subsidiaries, oftaken as a whole, any shares of, other than sales of excess or any options, warrants, calls, commitments or rights obsolete assets in the ordinary course of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreementbusiness consistent with past practice;
(viii) except with respect to indebtedness incurred under the Company’s Amended and Restated Loan Agreement, dated as of September 30, 2004, with U.S. Bank National Association and the Company’s uncommitted line of credit with The Bank of New York in the ordinary course of business consistent with past practice (A) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or of another Person, issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, in each case, other than (1) in connection with any refinancing on commercially reasonable terms any borrowings of the Company Subsidiariesor its Subsidiaries outstanding on the date hereof (or under any extensions or replacements thereof), including any revolving credit agreements or similar credit facilities and the Company’s 8.50% medium term notes due October 2006, and (2) indebtedness incurred by any Subsidiary of the Company under any loan permitted by clause (B), or (B) make any loans, advances or capital contributions to, or investments in, any other Person, other than to or in the Company or any Subsidiary;
(ix) except as required by Law make or in order agree to replace make any key employee whose employment is terminated with the Company capital expenditure or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereofexpenditures, other than (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant expenditures in accordance with Section 5.1(a)(ix) of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practiceDisclosure Schedules, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into expenditures contemplated in the ordinary course of business CEM and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase expenditures to the benefits payable under extent made or agreed to be made in order to ensure compliance with the rules and regulations or an order of the WUTC or OPUC or any existing severance, termination pay policies other Governmental Entity or employment agreements, (D) increase to ensure compliance with the compensation, bonus or other benefits terms of any current directorPermit, executive officer orin which case, to the extent permissible under applicable law, the Company will consult with Buyer prior to making or agreeing to make any such expenditure;
(x) engage in any activities not engaged in on the date hereof which would cause a change in the Company’s status as a local distribution company under PUHCA 2005;
(xi) enter into any Contract for the purchase and/or sale of natural gas (“Gas Supply Agreement”) other than any Gas Supply Agreement entered into in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of practice unless the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material Tax liability or enter into any transaction consults with an Affiliate outside the ordinary course of business if Buyer regarding such transaction would give rise to a material tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company Gas Supply Agreement and the Company Subsidiaries taken as has obtained the prior written consent of Buyer to such Gas Supply Agreement or such Gas Supply Agreement is fully compliant with criteria to which Buyer has previously given a whole generic consent, in each case, which consent will not be unreasonably withheld or as would result delayed, it being understood that in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in such consultation process Buyer and the Company Financial Statementswill comply with all applicable laws and any applicable confidentiality or similar third party agreement;
(xii) pay, discharge, settle settle, compromise or satisfy any material claims, Liensliabilities, litigation or other obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or waive, release or assign any such material rights or claims, other than the payment, discharge or satisfaction (A) involving more than $250,000 individually or $500,000 in the aggregateordinary and usual course of business consistent with past practice or (B) in accordance with their terms, which are not with respect to liabilities or other obligations reserved for or reflected on against in the balance sheet as of October 1, 2010 included financial statements in the Company Financial Statements or incurred since the date of Filed SEC Documents (in amounts not to exceed such audited financial statements reserves).
(xiii) enter into any Hedging Transactions other than in the ordinary course of business consistent with past practicepractice as set forth in Section 5.1(a)(xiii) of the Company Disclosure Schedule, other than fees provided, however, that all such Hedging Transactions (including those set forth in Section 5.1(a)(xiii) of the Company Disclosure Schedule) shall qualify for hedge accounting treatment under current accounting guidelines set forth in Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregateHedging Activities”;
(xiv) enter into any agreementadopt a plan of complete or partial liquidation or a dissolution or resolutions providing for or authorizing such a liquidation or a dissolution, arrangement restructuring, recapitalization or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operationsreorganization;
(xv) enter into commit or agree to take any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such defaultforegoing actions; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;or
(xvi) (A) enter intomake any change (or file any such change) in any method of Tax accounting for a material amount of Taxes, terminate (B) make, change or amend rescind any Material Contract that is material Tax election with respect to the Company and or any Subsidiary of the Company Subsidiaries (taken except as required by law), (C) settle or compromise any material Tax liability or otherwise pay or consent to any material assessment as the result of an audit, (D) file any amended Tax Return involving a wholematerial amount of additional Taxes (except as required by law), (E) enter into any closing agreement relating to a material amount of Taxes, or (F) waive or extend the statute of limitations in respect of Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business), other than (x) Contracts entered into for salesthan, non-exclusive licenses or services in each case, in the ordinary course of business and consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operationspractice.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Company covenants (a) From and agrees that, after the date hereof and prior to the Effective Time or the earlier of the termination of this Agreement pursuant to Article 9 or Agreement, except (i) with the Effective Time, unless prior written consent of Parent (x) Parent which consent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (yii) otherwise as required by applicable Law, (iii) as expressly contemplated by this Agreement or (ziv) expressly permitted or required pursuant to this Agreement (including as otherwise set forth in Section 5.1 of the Company Disclosure Letter):
(a) The Company and Schedule, the Company shall, and shall cause its Subsidiaries shall (i) conduct their to, carry on its business only in all material respects in the ordinary and usual course of business and consistent with past practices, (ii) use their respective commercially reasonable best efforts to preserve its business organization intact and maintain and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships existing relations with suppliers, contractors, distributors, key customers, licensors, licensees suppliers and others having material business relationships other third parties with them, and to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to whom the Company and its Subsidiaries have significant business relationships; provided, however, that no action by the Company Subsidiaries, taken as a whole, in each case, or its Subsidiaries with respect to the end that their good will and ongoing business matters permitted by any provision of Section 5.1(b) shall be unimpaired at the Effective Timedeemed a breach of this Section 5.1(a) unless such action would constitute a breach of such other provision of Section 5.1(b).
(b) Without limiting From and after the generality 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 required by applicable Law, (iii) as expressly contemplated by this Agreement or (iv) as otherwise set forth in Section 5.1 of the foregoing Section 5.1(a)Company Disclosure Schedule, the Company shall not, and shall not permit any of the Company its Subsidiaries to, do any of the following:
(i) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock or equity interests, except for (A) regular quarterly cash dividends of up to $0.08 per share with a declaration date, record date and payment date each being consistent with the Company’s past quarterly dividend practice and (B) dividends or distributions by a Subsidiary of the Company to the Company or to another wholly owned Subsidiary of the Company;
(ii) other than in the case of wholly owned Subsidiaries, split, combine, subdivide, adjust, amend the terms of or reclassify any of its capital stock or equity interests;
(iii) issue, deliver, sell, pledge, grant, transfer or otherwise encumber any shares of its capital stock or other equity securities or any option, 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 or granted in accordance with this Agreement, including with respect to the satisfaction of Tax withholding and, with respect to Company Stock Options outstanding as of the date of this Agreement or granted in accordance with this Agreement, the payment of the exercise price, (B) the issuance of any shares of capital stock or equity interests to the Company or any wholly owned Subsidiary of the Company and (C) 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;
(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 Subsidiaries, for amendments that would not be materially adverse to the Company or adversely impact the transactions contemplated hereby;
(v) other than (A) acquisitions of inventory, raw materials and other property in the ordinary course of business consistent with past practice, purchase (B) pursuant to transactions that would be permissible under clause (vii) below or as otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities set forth in Section 5.1(b)(v) of the Company and Disclosure Schedule, or (C) in transactions 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 Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion any of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents orits wholly owned Subsidiaries), in each case for an amount in excess of $6 million individually or $15 million in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Optionsaggregate;
(vi) splitother than contemplated by the capital budget of the Company made available to Parent prior to the date hereof, combine, subdivide or reclassify make any capital stockexpenditures that exceed $3 million in the aggregate;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practicepractice 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), 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 or assets for a purchase price or, if no purchase price is received, with a value, in excess of $6 million individually or $15 million in the aggregate;
(viii) 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 $6 million individually or $15 million in the aggregate, excluding (A) indebtedness solely among the Company and its wholly owned Subsidiaries or among its wholly owned Subsidiaries, (B) execute any employment, deferred compensation or other similar agreement (or any amendment pursuant to any such existing agreementthe terms of the Contracts set forth on Section 5.1(b)(viii) with any such director, officer, employee, agent or consultant of the Company Disclosure Schedule, or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase to finance acquisitions or investments permitted under clause (v) above; 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 benefits payable under any existing severance, termination pay policies ability of Parent or employment agreements, Merger Sub to consummate the Financing;
(Dix) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employeerenew or extend, agent materially amend or consultantterminate, 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, in each case of the types referred to in clauses (i), (iii), (iv), (v), (vii), (x) or (xii) of Section 3.15(b), other than entering into any Contract solely to the extent effecting a capital expenditure acquisition, disposition, or other transaction permitted by this Section 5.1(b);
(x) merge, combine or consolidate the Company or any of its Subsidiaries with and into any other Person, other than, in the case of any Subsidiary of the Company, to effect any acquisition permitted by clause (v) or any disposition permitted by clause (vii) and other than transactions 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 $4 million in the aggregate (excluding amounts to be paid under existing insurance policies or renewals thereof), 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 Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit planof its Subsidiaries, except as necessary to maintain Tax-qualified status or Tax-favored treatmentfor increases in base salary and payments of cash incentive compensation, or (F) provide any material benefit to a current or former directorin each case, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, (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 fees and expenses of advisors or other transaction costs related (1) as would not materially increase the cost to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, its Subsidiaries or (2) offer letters that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter are entered into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practicepractice with newly hired employees 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 or (E) hire or terminate the employment or services of any executive officer of the Company, other than a termination for cause or due to permanent disability;
(xvixiv) 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) (A) enter intomake, terminate change or amend revoke any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole)Tax election, other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party settlement or compromise of any material rights upon Tax liability, (C) file any amended material Tax Return that would result in a change in Tax liability, taxable income or loss, (D) adopt or change any method of control Tax accounting or annual Tax accounting period, (E) enter into any closing agreement relating to any material Tax liability, (F) agree to extend the statute of limitations in respect of any material amount of Taxes or (G) surrender any right to claim a material Tax refund;
(xvi) guarantee any indebtedness of another Person (other than the Company or that provides for any diminution of material rights its Subsidiaries), enter into any “keep well” or other agreement to maintain any financial statement condition of another Person (other than the Company or any of its Subsidiaries) or enter into any arrangement having the Company Subsidiaries upon a change economic effect of control any of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternativesforegoing;
(xvii) create enter into any Company Subsidiary, other than new line of business outside of the Company Subsidiaries that are already in existence as of Company’s and its Subsidiaries’ existing businesses on the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by adopt a comparable amount of insurance coverageshareholder rights plan or “poison pill”; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;or
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii)agree to take, make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) incommitment to take, or loan or advance toadopt any resolutions of the Company Board in support of, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; orforegoing.
(xxc) agree Except as expressly contemplated by this Agreement, none of Parent, Merger Sub or commit the Company shall take or permit any of their respective Subsidiaries to take any action that could reasonably be expected to prevent or to impede, interfere with, hinder or delay in any material respect the consummation of the actions precluded by Section 5.1(b). Notwithstanding Merger and the foregoing other transactions contemplated hereby.
(but without limiting the foregoing), nothing d) Nothing contained in this Agreement is intended to shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company any of its Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business its and its Subsidiaries’ respective operations.
Appears in 1 contract
Conduct of Business by the Company Pending the Merger. The Except (i) as expressly contemplated by this Agreement, (ii) as described in Section 5.1 of the Disclosure Schedule or (iii) to the extent Parent shall otherwise consent in writing, the Company covenants and agrees that, prior to during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to Article 9 or the Effective Time, unless (x) Parent shall otherwise consent in writing (such consent not be unreasonably withheld, delayed or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
(a) The Company shall conduct its business and that of its Subsidiaries, taken as a whole, only in, and the Company shall not take any action except in, and shall cause its Subsidiaries shall (i) conduct their business only in not to take any action except in, the ordinary and usual course of business and in a manner consistent with past practices, (ii) use their respective reasonable best efforts to maintain practice and preserve substantially intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services of their present officers and key employees and to comply in compliance in all material respects with all applicable Laws laws and regulations; and the requirements Company shall use all reasonable efforts to preserve substantially intact the business organization of all Contracts that are material to the Company and the Company its Subsidiaries, taken as a whole, to keep available the services of the current officers, employees and consultants of the Company and its Subsidiaries, and to preserve the present relationships of the Company and its Subsidiaries with customers, suppliers, distributors and other persons with which the Company or any of its Subsidiaries has significant business relations. Parent and the Company agree that the individuals identified in each case, Section 5.1(a) of the Disclosure Schedule shall be authorized to provide the agreement of Parent to the end that their good will and ongoing business shall be unimpaired at various acts of the Company contemplated by this Section 5.1 during the period from the date of this Agreement until the earlier of the termination of this Agreement or the Effective Time.. In addition, except (i) as expressly contemplated by this Agreement, (ii) as described in Section 5.1 of the Disclosure Schedule or (iii) to the extent Parent shall otherwise consent in writing, the Company shall not and shall not permit its Subsidiaries to, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time do any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company Charter or Company By-Laws or the Subsidiary Documents;
(b) Without limiting issue, sell, pledge, redeem, accelerate rights under, dispose of or encumber, or authorize the generality issuance, sale, pledge, redemption, acceleration of rights under, 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 any phantom interest) in the Company, any of its Subsidiaries or affiliates, except for (A) the issuance of shares of Company Common Stock pursuant to the exercise of currently outstanding Company Stock Options or outstanding purchase rights under the ESPP; (B) the grant of options under the Company Stock Plans (other than purchase rights under the ESPP) to purchase shares of Company Common Stock in the amounts described on Schedule 5.1(b) of the foregoing Section 5.1(a), Disclosure Schedule; provided that such options (1) are issued in the Company shall not, and shall not permit any of the Company Subsidiaries to, do any of the following:
(i) other than in ordinary course of business consistent with past practice, purchase or otherwise acquire(2) are issued in connection with the hiring of new employees, (3) are issued at exercise prices at least equal to the fair market value per share of the Company Common Stock on the date of grant, (4) do not include any vesting acceleration provisions other than those set forth in any applicable Company Stock Plan, and (5) vest in accordance with the Company's standard vesting schedule under the applicable Company Stock Plan; (C) the issuance of shares of Company Common Stock pursuant to the exercise of options granted in accordance with the preceding clause (B); and (D) the issuance of any shares of Company Common Stock pursuant to currently outstanding securities convertible into shares of Company Common Stock pursuant to the terms of such securities;
(c) sell, leasepledge, transfer or dispose of or encumber any assets, rights or securities assets of the Company or any of its Subsidiaries or suffer to exist any Lien thereupon (other than (i) sales of assets not to exceed $150,000 in the aggregate or non-exclusive licenses in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets or (iii) sales of immaterial assets not in excess of $75,000 in the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholeaggregate);
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(ivi) declare, set aside aside, make or pay any dividend or other distribution payable (whether in cash, capital stock, stock or property or otherwise with any combination thereof) in respect to of any shares of its capital stock;
(v) 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 except that a direct or any options, warrants or rights to acquire any such stock, securities or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors indirect wholly owned Subsidiary of the Company in payment of withholding tax upon the vesting of Restricted Stock may declare and Restricted Stock Units or pay a dividend to its parent, (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide combine or reclassify any of its capital stock;
(vii) except for stock or issue or authorize or propose the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, of or in substitution for any class shares of its capital stock, or (iii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any Subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its Subsidiaries, or any option, warrant or right, directly or indirectly, to acquire any such securities, or propose to do any of the foregoing, other than pursuant to (i) the exercise of currently outstanding on Company Stock Options or (ii) the date exercise of this Agreementthe Company's repurchase rights with respect to unvested shares held by individuals terminating employment or service with the Company or any Subsidiary;
(viiii) acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof; (ii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or optionsassume, warrants calls guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances or capital contributions to or investments in any other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) person, except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant in the ordinary course of business and consistent with past practice; (iii) enter into, (B) execute amend or waive any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable right under any existing severancematerial contract, termination pay policies agreement or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, joint venture other than in the ordinary course of business consistent with past practice, or any contract or agreement not entered into in the ordinary course of business consistent with past practices, or enter into, renew, fail to renew, amend or terminate any lease relating to real property, or open or close any facility comprising more than 5,000 square feet; (iv) adopt or implement any new stockholder rights plan; (v) authorize any capital expenditures or purchase of fixed assets which are in excess of $100,000 for any individual expenditure or purchase or in excess of $1,000,000 in the aggregate for all such expenditures and purchases, for the Company and its Subsidiaries taken as a whole; (vi) modify its standard warranty terms for its products or amend or modify any product warranties in effect as of the date of this Agreement in any manner that is adverse to the Company or any Subsidiary, other than extensions of warranties in the ordinary course of business; (vii) mortgage or pledge any of its assets, tangible or intangible, or create or suffer to exist any Lien thereupon, except in the ordinary course of business consistent with past practice; or (viii) enter into or amend any contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 5.1(e);
(f) increase the compensation payable or to become payable to its directors, officers or employees (other than increases payable to non-officer employeeemployees made in the ordinary course of business consistent with past practice), agent make any loan, advance or consultantcapital contribution (other than loans or advances of reasonable relocation expenses), or grant any severance or termination pay to, or enter into or amend any Company Employee Plan or other plan, contract, agreement or arrangement that would be a Company Employee Plan, establish, adopt, enter into or amend any collective bargaining agreement or other plan, agreement, trust, fund, policy or arrangement for the benefit of any current or former directors, officers or employees of the Company or any Company Subsidiaryof its Subsidiaries, (E) adopt pay any discretionary bonuses to any officer of the Company, materially change any actuarial assumption or establish other assumption used to calculate funding obligations with respect to any new employee benefit plan pension or amend in any material respect any existing employee benefit retirement plan, except or change the manner in which contributions to any such plan are made or the basis on which such contributions are determined, except, in each case, as necessary may be required by law or contractual commitments which are existing as of the date of this Agreement and listed in Section 3.13 of the Disclosure Schedule;
(g) take any action to maintain Tax-qualified status change accounting policies or Tax-favored treatmentprocedures (including procedures with respect to revenue recognition, payments of accounts payable and collection of accounts receivable), change any assumption underlying, or (F) provide method of calculating, any material benefit to a current bad debt contingency or former directorother reserve, officer, employee, agent or consultant of the Company or any Company Subsidiary not except in each case as required by any existing agreement or employee benefit plan.under GAAP;
(xh) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, election inconsistent with past practice or other Tax items for Tax purposes; settle or compromise any material federal, state, local or foreign Tax liability or enter into any transaction with agree to an Affiliate outside the ordinary course extension of business if such transaction would give rise to a material tax liability; waive any statute of limitations in respect of a limitations, fail to file any Tax Return when due (or, alternatively, fail to file for available extensions) or fail to cause such Tax Returns when filed to be complete and accurate; or fail to pay any material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencywhen due;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xiii) pay, discharge, settle discharge or satisfy any claims, Liens, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more ), other than $250,000 individually the payment, discharge or $500,000 satisfaction in the aggregate, which are not ordinary course of business and consistent with past practice of liabilities reflected or reserved for or reflected on the balance sheet as of October 1, 2010 included against in the financial statements contained in the Filed Company Financial Statements SEC Documents or incurred since in the date ordinary course of such audited financial statements business and consistent with past practice;
(j) fail to pay accounts payable and other obligations in the ordinary course of business;
(k) accelerate the collection of receivables or modify the payment terms of any receivables other than in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parentpractices;
(xiiil) make sell, securitize, factor or commit to make capital expenditures in excess of $200,000 in the aggregateotherwise transfer any accounts receivable;
(xivm) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Subsidiary (other than the Merger or as expressly provided in this Agreement);
(n) revalue in any material respect any of its assets, including writing down the value of inventory or writing off notes or accounts receivable, except as required under GAAP;
(o) enter into any agreement, arrangement contract or commitment that materially limits of any type referred to in Section 3.6, or take, or agree in writing or otherwise materially restricts the Company or any Company Subsidiaryto take, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take any of the actions precluded by Section 5.1(b). Notwithstanding described in Sections 5.1(a) through (n) above, or any action which would make any of the foregoing (but without limiting representations or warranties of the foregoing), nothing Company contained in this Agreement is intended to give Parent untrue or Merger Sub, directly incorrect or indirectly, the right to control or direct the business or operations of prevent the Company from performing or cause the Company Subsidiaries at any time prior not to perform its covenants hereunder, in each case, such that the Effective Time. Prior to conditions set forth in Sections 7.2(a) or 7.2(b), as the Effective Timecase may be, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operationswould not be satisfied.
Appears in 1 contract
Samples: Merger Agreement (Emc Corp)
Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to from the earlier of the termination of this Agreement pursuant to Article 9 or date hereof until the Effective Time, except as set forth on Schedule 6.1 of the Company Disclosure Letter, unless (x) Parent shall otherwise consent in writing (such which consent shall not be unreasonably withheld, delayed ) in writing (including electronic mail) or conditioned), (y) otherwise required by applicable Law, or (z) except as expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):Agreement:
(a) The businesses of the Company and the Company Subsidiaries shall (i) conduct their business be conducted only in the ordinary and usual course of business and consistent with past practices, (ii) and the Company and the Company Subsidiaries shall use their respective reasonable best efforts to maintain their assets and preserve substantially intact their respective business organizations, to maintain their assets and significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, them and to retain keep available the services of their present current key officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective Time.employees;
(b) Without limiting the generality of Section 6.1(a), except (i) as set forth on Schedule 6.1(b) of the foregoing Section 5.1(a)Company Disclosure Letter, (ii) as contemplated by this Agreement, (iii) as required by applicable Law for which the Company shall use its reasonable best efforts to give advance notice to Parent and (iv) for intercompany transactions between the Company Subsidiaries or the Company and Company Subsidiaries in the ordinary course of business consistent with past practices, the Company shall notnot directly or indirectly, and shall not permit any of the Company Subsidiaries to, do any of the following:
(i) other than except for dispositions of inventory and consumables in the ordinary course of business consistent with past practice, purchase or otherwise acquirepractices, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and or the Company Subsidiaries that are material to outside of the Company and the Company Subsidiaries taken as a wholeordinary course of business in excess of $100 million in any single transaction or series of related transactions;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof, or enter into binding agreements with respect to any such acquisition, in each case in excess of $150 million (including any contingent consideration) in any single transaction or series of related transactions or if such acquisition would prevent, materially delay or materially impede the satisfaction of the condition set forth in Section 8.1(b), other than pursuant to existing contracts;
(iii) enter into any partnership, joint venture agreement or similar arrangement if the aggregate amount of capital contributions required to be made under all such arrangements would exceed $150 million;
(iv) amend or propose to amend the certificate of incorporation or bylaws (or respective constituent documents) of the Company Charter Documents or, in a manner that would be adverse to Parent or its stockholders, the case certificate of incorporation or bylaws (or respective constituent documents) of (A) any significant Company Subsidiary identified in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 or (B) any other Company Subsidiary that is material to the business of the Company Subsidiaries, their respective Subsidiary Documentsand the Company Subsidiaries taken as a whole;
(ivv) except for regular quarterly cash dividends consistent with the amounts declared prior to the date of this Agreement and paid during the third and fourth quarters of 2014, 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;
(vvi) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of the exercise price or withholding tax upon the exercise, vesting or delivery, as applicable, of Restricted Stock and Restricted Stock Units Company Incentive Awards or (ii) the cashless or net exercise forfeiture of Optionsshares due to termination of employment;
(vivii) split, combine, subdivide combine or reclassify any outstanding shares of its capital stock;
(viiviii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber of or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company Subsidiaries, Subsidiaries of, any shares of, or any options, warrants, calls, commitments warrants or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, stock outstanding on the date hereof, except for issuances by a wholly-owned subsidiary of this Agreementthe Company to the Company or to another wholly-owned subsidiary of the Company;
(viiiix) incur modify the terms of any existing indebtedness for borrowed money or security issued by the Company or any Company Subsidiary having an aggregate principal amount in excess of $100 million in any respect;
(A) except for trade letters of credit or guarantees issued in the ordinary course of business, incur, assume, guarantee, or become obligated following the date of this Agreement with respect to any indebtedness for borrowed money (other than trade payables) including capital leases as defined under GAAP), if the aggregate amount of such incurrences, assumptions, guarantees or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after obligations following the date of this Agreement or as required by the provisions (net of a Company Employee Benefit Plan in effect on any repayments following the date hereofof this Agreement) would exceed $1 billion, (AB) grant make any individual loan, advance or increase capital contribution to or investment in excess of $50 million in any severance other Person (other than any wholly-owned Company Subsidiary), (C) pledge or termination pay to any current director, officer, employee, agent or consultant otherwise encumber shares of capital stock of the Company or any Company Subsidiary, (D) mortgage or pledge any of its material tangible or intangible assets, or create or suffer to exist any Liens thereupon (other than severance currently existing Liens and termination pay Permitted Liens) of $100 million or more in the aggregate; or (E) fund or prepay any obligations to any non-officer employeePerson, agent or consultant that are not due and payable until after Closing unless in the ordinary course of business and consistent with past practice, (B) execute any employment, deferred compensation practices or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant as disclosed on Schedule 6.1 of the Company or Disclosure Letter;
(xi) except to the extent required by applicable Law, by any Company SubsidiaryBenefit Plan as in effect on the date hereof or by contracts in existence as of the date hereof, other than at-will employment arrangements entered into or as required by Section 7.3 or as contemplated by Section 3.4, (A) subject to clause (H) below, materially increase the compensation or benefits of any of its employees, officers, directors, consultants, independent contractors or service providers, except in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company practices, (B) enter into or materially amend any Company SubsidiaryBenefit Plan, except in the ordinary course of business consistent with past practices or if such action applies on a substantially similar basis to employees generally within a jurisdiction, (C) increase the benefits payable under enter into, materially amend, alter or modify, or adopt or implement or otherwise commit itself to any existing severanceplans or arrangements providing for retiree or post-employment medical, termination pay policies accident, disability, life insurance, death or employment agreementswelfare benefits, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than except in the ordinary course of business consistent with past practice, non-officer employee(D) make a payment of any pension, agent severance or consultant, of the Company or retirement benefits not required by any Company SubsidiaryBenefit Plan or accelerate the vesting or payment of any compensation or benefit under any Company Benefit Plan, except in the ordinary course of business consistent with past practices, (E) adopt accelerate the vesting of, or establish the lapse of restriction with respect to, any new employee benefit plan or amend in any material respect any existing employee benefit planCompany Incentive Awards, except as necessary to maintain Tax-qualified status or Tax-favored treatmentin the ordinary course of business consistent with past practices, or (F) cause the funding of any rabbi trust or similar arrangement or take any action to materially fund or in any other way materially secure the payment of nonqualified compensation or benefits under any Company Benefit Plan, except in the ordinary course of business consistent with past practices, (G) enter into, renew or materially modify any collective bargaining or similar agreement, except in the ordinary course of business consistent with past practices or (H) make any new equity awards to any director or employee; provided that, for the 2015 calendar year and for each calendar year thereafter, the Company may make new equity awards to directors and employees in accordance with the terms set forth on Schedule 6.1(b)(xi) of the Company Disclosure Letter, which equity awards shall provide that the transactions contemplated by this Agreement shall not constitute a “change of control” for purposes of such awards (provided that such awards that are subject to achievement of performance criteria may be converted as of the Effective Time into awards solely subject to vesting based on the passage of time);
(xii) except in compliance in all material respects with compliance programs in effect as of the date of this Agreement (or as amended after the date of this Agreement; provided that such amendments are not material), enter into or amend any material benefit to a current or former director, officer, employee, agent or consultant of agreement between the Company or any Company Subsidiary not and any agent, sales representative or similar person;
(xiii) except in the ordinary course of business consistent with past practices, execute or amend (other than as required by existing Company Benefit Plans or employment agreements or by applicable Law) in any existing material respect any material consulting or indemnification agreement between the Company or any of the Company Subsidiaries and any of their respective directors, officers, agents, consultants or employees, or any material collective bargaining agreement or employee benefit plan.other material agreement with any labor organization entered into by the Company or any of the Company Subsidiaries (other than as required by existing Company Benefit Plans or agreements or by applicable Law);
(xxiv) except in the ordinary course of business consistent with past practices, make any material changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) methods other than as required by GAAP or applicable Law; make, change or rescind any material Tax electionelection or file any material amended Tax Return; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax Tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xixv) unless otherwise permitted under Section 6.1(b)(xi) enter into, amend or terminate any Material Contract, or any agreement that would be a Material Contract if it had been in existence on the date hereof, outside the ordinary course of business;
(xvi) waive, release, assign, settle, compromise or otherwise resolve any investigation, claim (excluding customer claims in the ordinary course of business that have not resulted in litigation), action, litigation or other legal proceedings proceedings, except where such waivers, releases, assignments, settlements or compromises involve only the payment of monetary damages (as well as related non-substantive incidental provisions and other remedies or obligations that are not material to in the context of the applicable resolution and which do not restrict Parent or its Subsidiaries (other than the Company and its Subsidiaries) from and after the Company Subsidiaries taken as a whole or as would result Closing) in any liability amounts not in excess of the amount reserved therefor $25 million individually, or reflected on the balance sheets included $200 million in the Company Financial Statementsaggregate for all such proceedings;
(xiixvii) pay, discharge, settle make or satisfy commit to make capital expenditures (which for the avoidance of doubt shall not include capital leases) in excess of $2.2 billion in any claims, Liens, obligations calendar year;
(absolute, accrued, asserted xviii) make or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in assume any Hxxxxx outside the ordinary course of business consistent with past practicepractices. For purposes of this provision, “Hedge” means a derivative transaction within the coverage of SFAS No. 133, including any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, credit-related events or conditions or indexes, or any other than fees and expenses similar transaction (including any option with respect to any of advisors these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other transaction costs similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral, transportation or other similar arrangement related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parentsuch transactions;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xivxix) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company Parent or any Company SubsidiaryParent Subsidiary or any of their respective Affiliates or any successor thereto, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operationsarea;
(xvxx) enter into any lease adopt a plan of complete or sublease of real property (whether as lessorpartial liquidation, sublessordissolution, lessee merger, consolidation, restructuring, recapitalization or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default other reorganization of the Company, or without consulting with Parent and considering its comments in good faith, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other party thereto after notice and a failure reorganization of any Company Subsidiary identified in Exhibit 21.1 to the other party to cure such default; and (y) a renewal of an existing lease or sublease in Company’s Annual Report on Form 10-K for the ordinary course of business consistent with past practiceyear ended December 31, 2013;
(xvixxi) take any action that would reasonably be expected to (A) enter intoresult in any inaccuracy of a representation or warranty herein that would allow for a termination of this Agreement, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into cause any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of conditions precedent to the Company or the Company Subsidiaries upon a change of control of the Company or that can transactions contemplated by this Agreement to fail to be terminated by such third party upon a change of control of the Company satisfied or (C) release any Person from prior to its expirationprevent, materially delay or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with materially impede the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as consummation of the date of Merger or any other transaction contemplated by this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xxxxii) take or agree or commit in writing to take any of the actions precluded by Section 5.1(b6.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Samples: Merger Agreement (Baker Hughes Inc)
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to between the date of this Agreement and the Effective Time or the earlier of the termination of this Agreement, except (1) as expressly contemplated by any other provision of this Agreement pursuant to Article 9 or any Ancillary Agreement, (2) as set forth in Section 6.01 of the Effective TimeCompany Disclosure Schedule, and (3) as required by applicable Law or any COVID-19 Measure (including as may be requested or compelled by any Governmental Authority), unless (x) Parent DCRC shall otherwise consent in writing (such which consent shall not be unreasonably withheld, delayed conditioned or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letterdelayed):
(ai) The Company and the Company Subsidiaries shall (i) use reasonable best efforts to conduct their its business only in the ordinary and usual course of business and in a manner consistent with past practices, practice; and
(ii) the Company shall use their respective its reasonable best efforts to maintain and preserve substantially intact their respective the business organizationsorganization of the Company, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain keep available the services of their present officers and the current officers, key employees and to comply in all material respects with all applicable Laws and the requirements consultants of all Contracts that are material to the Company and to preserve the current relationships of the Company Subsidiarieswith customers, taken as a whole, in each case, suppliers and other persons with which the Company has significant business relations (provided that the Company shall not be required to the end that their good will and ongoing business shall be unimpaired at the Effective Timeamend or otherwise change any Plan for purposes of this Section 6.01(a)(ii)).
(b) Without limiting the generality By way of amplification and not limitation, except as (1) expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 6.01 of the foregoing Section 5.1(aCompany Disclosure Schedule, and (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), the Company shall not, between the date of this Agreement and shall not permit any the Effective Time or the earlier termination of the Company Subsidiaries tothis Agreement, directly or indirectly, do any of the following:following without the prior written consent of DCRC (which consent shall not be unreasonably withheld, conditioned or delayed):
(i) other than in ordinary course of business consistent with past practice, purchase amend or otherwise acquire, sell, lease, transfer change its articles of incorporation or dispose of bylaws or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholeequivalent organizational documents;
(ii) acquire by merging adopt or consolidating with enter into a plan of complete or by purchasing all partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or a substantial equity interest in or a substantial portion other reorganization of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereofCompany;
(iii) amend issue, sell, pledge, dispose of, grant any Lien (other than a Permitted Lien) on, or propose authorize the issuance, sale, pledge, disposition, grant of any Lien (other than a Permitted Lien) on, (A) any shares of any class of capital stock of the Company, or any options, warrants, convertible securities or other rights of any kind to amend acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company, provided that (x) the exercise of, and issuance of shares of Company Charter Documents orCommon Stock pursuant to, any Company Options outstanding and in effect on the case date of this Agreement, (y) the issuance of shares of Company Common Stock pursuant to the terms of the Company Subsidiaries, their respective Subsidiary DocumentsWarrants and Company Preferred Stock in effect on the date of this Agreement shall not require the consent of DCRC and (z) grants to employees of the Company and other service providers of the Company in the amount and subject to the terms and conditions set forth on Section 6.01(b)(iii) of the Company Disclosure Schedule; or (B) any material assets of the Company;
(iv) form any subsidiary or acquire any equity interest or other interest in any other entity or enter into a joint venture with any other entity;
(v) declare, set aside aside, make or pay any dividend or other distribution distribution, payable in cash, capital stock, property or otherwise otherwise, with respect to any shares of its capital stock;
(vvi) purchasereclassify, redeem combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or offer to purchase, redeem or otherwise acquireindirectly, any shares of its capital stock, other than redemptions of equity securities from former employees upon the terms set forth in the underlying agreements governing such equity securities, other ownership interests or any options, warrants or rights to acquire any such stock, securities or interests, other than in connection with (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance (A) acquire (including, without limitation, by merger, consolidation, or acquisition of Shares upon the exercise stock or conversion of Options outstanding on the date of this Agreement or upon exercise substantially all of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind assets or any other agreements of business combination) any character to acquire any shares ofcorporation, partnership, other business organization or any securities convertible into division thereof; or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viiiB) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or optionsassume, warrants calls guarantee or endorse, or otherwise become responsible for, the obligations of any person, or make any loans or advances, or intentionally grant any security interest in any of its assets;
(viii) enter into, renew or amend in any material respect any Company Interested Party Transaction (or any contractual or other rights to acquire any debt securities arrangement, that if existing on the date of the this Agreement, would have constituted a Company or any Company SubsidiariesInterested Party Transaction);
(ix) except as required by Law (A) grant any increase in the compensation, incentives or benefits payable or to become payable to any current or former director, officer, employee or consultant; (B) enter into or amend any existing, employment, retention, bonus, change in order control, severance or termination agreement with any current or former director, officer, employee or consultant; (C) accelerate or commit to accelerate the funding, payment, or vesting of any compensation or benefits to any current or former director, officer, employee or consultant; (D) transfer or terminate (other than for cause) the employment of any employee or hire any new employee (unless necessary to replace any key an employee whose employment is terminated has ended and, in such case, on terms comparable to those of the employee being replaced); (E) establish or become obligated under any collective bargaining agreement, collective agreement, or other contract or agreement with a labor union, trade union, works council, or other representative of employees; or (F) adopt, amend and/or terminate any Plan except for health and welfare plan renewals in the ordinary course of business, except in each of clauses (A) through (F) that the Company may take action (x) as required under any Plan or a Company Subsidiary after other employment or consulting agreement in effect on the date of this Agreement or as required by in accordance with the provisions of a Company Employee Benefit terms such Plan in effect on the date hereofof this Agreement, (y) as may be required by applicable Law or (z) is necessary in order to consummate the Transactions; and except, in the case of clauses (A) grant and (D), for such employees that are not directors or increase any severance or termination pay to any current director, officer, employee, agent or consultant officers of the Company or any Company Subsidiary, other than severance and termination pay to any non-officer employee, agent or consultant where such modification of employment terms was made in the ordinary course of business and consistent with past practicebusiness, and, in the case of clause (B) execute any employment), deferred compensation for employment and termination agreements with employees that are not directors or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant officers of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business business;
(x) materially amend other than reasonable and consistent usual amendments in the ordinary course of business, with past practice that are terminable at will and without respect to accounting policies or procedures, other than as required by GAAP;
(xi) (A) amend any material liability to the Company or Tax Return, (B) change any Company Subsidiarymaterial method of Tax accounting, (C) increase the benefits payable under make, change or rescind any existing severancematerial election relating to Taxes, termination pay policies or employment agreements, (D) increase the compensationsettle or compromise any material U.S. federal, bonus state, local or non-U.S. Tax audit, assessment, Tax claim or other benefits of any current director, executive officer or, controversy relating to Taxes;
(xii) (A) other than in the ordinary course of business consistent with past practicepractice and which does not impose material obligations or limitations on the Company or otherwise materially adversely impact the Company, non-officer employeeamend, agent or consultantmodify or consent to the termination (excluding any expiration in accordance with its terms) of any Material Contract, or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of the Company’s rights thereunder or (B) enter into any contract or agreement that would have been a Material Contract had it been entered into prior to the date of this Agreement;
(xiii) enter into any contract, agreement or arrangement that obligates the Company to develop any Intellectual Property related to the business of the Company or any Company Subsidiarythe Products in a manner whereby such developed Intellectual Property would be owned solely by the counterparty to such contract, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencyarrangement;
(xixiv) settleintentionally (A) permit any material item of Company-Owned IP to lapse or to be abandoned, compromise invalidated, dedicated to the public, or disclaimed, or otherwise resolve become unenforceable or (B) fail to perform or make any litigation applicable filings, or other legal proceedings material recordings, or fail to the Company pay all required fees and the Company Subsidiaries taken as a whole or as Taxes, in each case, that would result in the invalidation, unenforceability, loss or abandonment of any liability material Company-Owned IP, in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) payeach case, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more other than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practiceas part of the Company’s prosecution and maintenance of its Intellectual Property portfolio, provided that the foregoing exclusion shall not permit the abandonment of any material item of Registered Intellectual Property;
(xv) waive, release, assign, settle or compromise any Action, other than fees waivers, releases, assignments, settlements or compromises that are solely monetary in nature and expenses of advisors do not exceed $500,000 individually or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 1,000,000 in the aggregate;
(xivxvi) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material new line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default outside of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to currently conducted by the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xvii) voluntarily fail to maintain, cancel or materially change coverage under any insurance policy in form and amount equivalent in all material respects to the insurance coverage currently maintained with respect to the Company and its assets and properties;
(xviii) fail to use commercially reasonable efforts to keep current and in full force and effect effect, or to comply in all material insurance policies maintained by respects with the requirements of, any of the Company and Permits that are material to the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount conduct of insurance coveragethe business of the Company; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of business;or
(xix) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), enter into any formal or informal agreement or otherwise make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances a binding commitment to its employees, or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or
(xx) agree or commit to take do any of the actions precluded by Section 5.1(b)foregoing. Notwithstanding Nothing herein shall require the Company to obtain consent from DCRC to do any of the foregoing (but without limiting the foregoing)if obtaining such consent might reasonably be expected to violate applicable Law, and nothing contained in this Agreement is intended Section 6.01 shall give to give Parent or Merger SubDCRC, directly or indirectly, the right to control or direct the ordinary course of business or operations of the Company or the Company Subsidiaries at any time prior to the Effective TimeClosing Date. Prior to the Effective TimeClosing Date, the Company each of DCRC and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreementhereof, complete control and supervision over their own business and of its respective operations, as required by Law.
Appears in 1 contract
Samples: Business Combination Agreement (Decarbonization Plus Acquisition Corp III)
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to between the earlier of the termination date of this Agreement pursuant to Article 9 or and the Effective Time, unless except (xi) Parent shall otherwise consent as set forth in writing (such consent not be unreasonably withheld, delayed or conditioned), (ySection 6.01(a) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):
Schedule, (aii) The as expressly permitted by any other provision of this Agreement or (iii) with the prior written consent of Parent (which shall not be unreasonably withheld or delayed), the businesses of the Company and its Subsidiaries shall be conducted only in, and the Company and its Subsidiaries shall (i) conduct their business only in not take any action except in, the ordinary and usual course of business and in a manner consistent with past practices, (ii) practice and the Company and each of its Subsidiaries shall use their respective commercially reasonable best efforts to maintain and (A) preserve substantially intact their respective existing assets, (B) preserve substantially intact their business organizationsorganization, to (C) keep available the required services of their current officers, employees and consultants, (D) maintain and preserve intact their significant beneficial business current relationships with suppliers, contractors, distributors, customers, licensors, licensees creditors and others having material other Persons with which the Company or any of its Subsidiaries has significant business relationships with them, relations and to retain the services of their present officers and key employees and to (E) comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their good will and ongoing business shall be unimpaired at the Effective TimeLaw.
(b) Without limiting the generality By way of the foregoing amplification and not limitation, except as set forth in Section 5.1(a), the Company shall not, and shall not permit any 6.01(b) of the Company Disclosure Schedule, as expressly permitted by any other provision of this Agreement or with the prior written consent of Parent (which shall not be unreasonably withheld or delayed), neither the Company nor any of its Subsidiaries toshall, do between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to do, any of the following:
(i) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;
(ii) (A) issue, sell, pledge or dispose of, (B) grant an Encumbrance on or permit an Encumbrance to exist on, or (C) authorize the issuance, sale, pledge or disposition of, or granting or placing of an Encumbrance on, any shares of any class of capital stock, or other ownership interests, of the Company or any of its Subsidiaries, 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 any phantom interest) of the Company or any of its Subsidiaries (except for the issuance of up to a maximum of 1,534,363 Shares issuable pursuant to Company Stock Awards outstanding on the date hereof, of which 1,534,363 are issuable pursuant to Company Stock Options;
(iii) (A) sell, pledge or dispose of, (B) grant an Encumbrance on or permit an Encumbrance, other than, in each case, a Permitted Encumbrance, to exist on, or (C) authorize the sale, pledge or disposition of, or granting or placing of an Encumbrance, other than a Permitted Encumbrance on, any material assets, in the amount of $20,000 individually or $75,000 in the aggregate, of the Company or any of its Subsidiaries;
(iv) declare, set aside, make or pay any dividend or other distribution, 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;
(vi) (A) acquire (including by merger, consolidation or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any material amount of assets; (B) 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; (C) authorize, or make any commitment with respect to, any single capital expenditure which is in excess of $20,000 or capital expenditures which are, in the aggregate, in excess of $75,000 for the Company and its Subsidiaries taken as a whole; or (D) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 6.01(b)(vi);
(vii) (A) hire any employees or (B) terminate the employment of any employees other than for “cause”;
(viii) (A) increase the compensation payable or to become payable or the benefits provided to any current or former Service Provider or pay any amounts to any such Service Provider (in each case, other than salary or wages in the ordinary course of business consistent with past practice), purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber 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, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by under applicable Law or in order to replace the terms of any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof; (B) grant any severance, retention or termination pay to, or enter into any employment, bonus, change in control, retention or severance agreement with, any current or former Service Provider; or (C) establish, adopt, enter into or amend any collective bargaining agreement, bonus, profit sharing, thrift, compensation, Company Stock Award, pension, retirement, deferred compensation, employment, termination, change in control, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any Service Provider; (D) loan or advance any money or property to any Service Provider; or (E) grant any equity or equity-based awards;
(A) grant exercise discretion with respect to or increase otherwise voluntarily accelerate the lapse of restriction or vesting of any severance equity or termination pay to equity-based awards as a result of the Merger, any current director, officer, employee, agent or consultant other change of control of the Company or otherwise; or (B) exercise its discretion with respect to or otherwise amend, modify or supplement any Company Subsidiaryemployee stock purchase plan;
(x) terminate, discontinue, close or dispose of any plant, facility or other business operation, or implement any early retirement or separation program, or any program providing early retirement window benefits or announce or plan any such action or program for the future;
(xi) take any action, other than severance immaterial reasonable and termination pay to any non-officer employee, agent or consultant usual actions in the ordinary course of business and consistent with past practice, with respect to accounting policies or procedures;
(xii) (A) make any change (or file any such change) in any method of Tax accounting, (B) execute any employmentmake, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or any Company Subsidiary, other than at-will employment arrangements entered into in the ordinary course of business and consistent with past practice that are terminable at will and without material liability to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; (C) settle or compromise any material Tax liability or consent to any claim or assessment relating to Taxes; (D) file any amended Tax Return or claim for refund; (E) enter into any transaction with an Affiliate outside closing agreement relating to material Taxes; or (F) waive or extend the ordinary course of business if such transaction would give rise to a material tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiencyTaxes;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xiixiii) pay, discharge, settle discharge or satisfy any claimsclaim, Liens, obligations liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the Balance Sheet or subsequently incurred in the ordinary course of business and consistent with past practice;
(xiv) involving more commence or settle any Action in an amount greater than $250,000 individually 20,000.;
(xv) enter into, amend, modify or $500,000 in consent to the aggregatetermination of any Material Contract, which are not reserved for or reflected on enter into, amend, waive, modify or consent to the balance sheet as termination of October 1the Company’s or any of its Subsidiaries’ material rights thereunder;
(xvi) (A) abandon, 2010 included disclaim, dedicate to the public, sell, assign or grant any security interest in, to or under any Company Intellectual Property or Company IP Agreement, including failing to perform or cause to be performed all applicable filings, recordings and other acts, or to pay or cause to be paid all required fees and Taxes, to maintain and protect its interest in the Company Financial Statements Intellectual Property and Company IP Agreements; (B) grant to any third party any license, or incurred since the date of such audited financial statements enter into any covenant not to xxx, with respect to any Company Intellectual Property, except in the ordinary course of business consistent with past practice; (C) develop, create or invent any Intellectual Property jointly with any third party, except under existing arrangements that have been disclosed to Parent; (D) disclose or allow to be disclosed any confidential information or confidential Company Intellectual Property to any Person, other than fees and expenses employees of advisors the Company or its Subsidiaries or other transaction costs related Persons that are subject to this Agreement a valid and the transactions contemplated hereunder substantially as previously disclosed enforceable written confidentiality or non-disclosure covenant protecting against further disclosure thereof; or (E) fail to Parent;
(xiii) make notify Parent promptly of any infringement, misappropriation or commit to make capital expenditures in excess other violation of $200,000 in the aggregate;
(xiv) enter into or conflict with any agreement, arrangement or commitment that materially limits or otherwise materially restricts material Company Intellectual Property of which the Company or any of its Subsidiaries becomes aware and to consult with Parent regarding the actions (if any) to take to protect such Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternativesIntellectual Property;
(xvii) create any Company Subsidiary, other than fail to timely exercise cancellation rights pursuant to the terms of the Leases set forth in Section 4.12(b) of the Company Subsidiaries that are already in existence as of the date of this AgreementDisclosure Schedule;
(xviii) fail to use commercially reasonable efforts to keep make in full force a timely manner any (A) filings with the SEC required under the Securities Act or the Exchange Act or the rules and effect all regulations promulgated thereunder or (B) any material insurance policies maintained disclosures mandated by the Company rules and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount regulations of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made in the ordinary course of businessNASDAQ;
(xix) except fail to maintain (with insurance companies substantially as permitted under Section 5.1(b)(ifinancially responsible as its existing insurers) insurance in at least such amounts and Section 5.1(b)(ii), make any investment against at least such risks and losses as are consistent in all material respects with the Company’s and its Subsidiaries’ past practice;
(by contribution xx) with respect to the development of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than the MiFlow VAD: (A) travel and similar advances to its employees, incur liabilities after the date hereof or (B) make payments, including salaries or other compensation, to a direct or indirect wholly-owned Company Subsidiarythe retained MiFlow VAD research and development staff, in the case of each of (A) and (B) in an amount greater the ordinary course of businessamount specified in the “MiFlow Cost Analysis” attached hereto as Exhibit D; or
(xxxxi) agree announce an intention, enter into any formal or commit informal agreement or otherwise make a commitment, to take do any of the actions precluded by Section 5.1(b). Notwithstanding foregoing.
(c) In addition, between the foregoing (but without limiting the foregoing), nothing in date of this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to and the Effective Time, the Company and its Subsidiaries shall (i) promptly notify Parent of any notice of any suit, claim, action, investigation, audit or proceeding in respect of any Tax matters (or any significant developments with respect to ongoing suits, claims, actions, investigations, audits or proceedings in respect of such Tax matters), (ii) prepare and timely file all Tax Returns required to be filed before the Effective Time, and (iii) timely pay all Taxes shown to be due and payable on such Tax Returns, provided, however, that (A) such Tax Returns shall be prepared on a basis consistent with those prepared for prior taxable periods unless a different treatment of any item is required by an intervening change in Law, and (B) the Company Subsidiaries shall exercise, consistent provide Parent and its authorized representative with a copy of such completed Tax Return at least 30 days prior to the terms due date (including any extension thereof) for the filing of such Tax Return and conditions of this Agreement, complete control and supervision over their own business and operationsshall accept any comments made by Parent with respect to any material issue or item.
Appears in 1 contract
Samples: Agreement and Plan of Merger and Reorganization (World Heart Corp)
Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, prior to from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement, except as (1) expressly contemplated by any other provision of this Agreement pursuant to Article 9 or the Effective Timeany Ancillary Agreement, (2) as set forth in Schedule 6.01(a) attached hereto, or (3) as required by applicable Law, unless (x) Parent Goldenstone shall otherwise consent in writing (such which consent shall not be unreasonably withheldconditioned, delayed withheld or conditioned), (y) otherwise required by applicable Law, or (z) expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letterdelayed):
(ai) The the Company shall, and shall cause the Company Subsidiaries shall (i) to, conduct their business only in the ordinary and usual course of business and in a manner consistent with past practices, practice; and
(ii) the Company shall use their respective its commercially reasonable best efforts to maintain and preserve substantially intact their respective the business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, and to retain the services organization of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a wholeto keep available the services of the current officers, in each casekey employees and key Contingent Workers of the Company and the Company Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, to suppliers and other persons with which the end that their good will and ongoing Company or any Company Subsidiary has significant business shall be unimpaired at the Effective Timerelations.
(b) Without limiting the generality By way of the foregoing Section 5.1(a)amplification and not limitation, except as (1) expressly contemplated by any other provision of this Agreement, any Ancillary Agreement, (2) as set forth in Schedule 6.01(b) attached hereto, and (3) as required by applicable Law, the Company shall not, and shall cause each Company Subsidiary not permit any to, between the date of this Agreement and the Company Subsidiaries toEffective Time or the earlier termination of this Agreement, directly or indirectly, do any of the following:following without the prior written consent of Goldenstone (which consent shall not be unreasonably conditioned, withheld or delayed):
(i) other than in ordinary course of business consistent with past practice, purchase amend or otherwise acquirechange its certificate of incorporation or bylaws or equivalent organizational documents or engage in any reorganization, sellreclassification, leaseliquidation, transfer dissolution, or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a wholesimilar transaction;
(ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;
(iii) amend or propose to amend the Company Charter Documents or, in the case of the Company Subsidiaries, their respective Subsidiary Documents;
(iv) 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;
(v) 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 (i) the relinquishment of shares by former or current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock and Restricted Stock Units or (ii) the cashless or net exercise of Options;
(vi) split, combine, subdivide or reclassify any capital stock;
(vii) except for the issuance of Shares upon the exercise or conversion of Options outstanding on the date of this Agreement or upon exercise of the Top-Up Option, and the vesting of Restricted Stock awards and Restricted Stock Units granted prior to the execution of this Agreement, issue, sell, grantpledge, dispose of, pledge grant or otherwise encumber encumber, or authorize, propose or agree to authorize the issuance, sale sale, pledge, disposition, grant or disposition by encumbrance of any shares of any class of capital stock of the Company or any of the Company Subsidiaries, of, any shares ofSubsidiary, or any options, warrants, calls, commitments convertible securities or other rights of any kind or any other agreements of any character to acquire any shares ofof such capital stock, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock, outstanding on the date of this Agreement;
(viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “make well” or similar agreement or issue or sell any debt securities or options, warrants calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;
(ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date of this Agreement or as required by the provisions of a Company Employee Benefit Plan in effect on the date hereof, (A) grant or increase any severance or termination pay to any current director, officer, employee, agent or consultant ownership interest of the Company or any Company Subsidiary, other than severance and termination pay (1) the exercise or settlement of any Company Options, (2) the capital stock or note with respect to the Pre-Closing Investment, (3) the convertible note with respect to the Bridge Financing;
(iii) sell, pledge, dispose of, encumber, or authorize the sale, pledge, disposition or encumbrance of any non-officer employee, agent material assets of the Company or consultant any Company Subsidiary except in the ordinary course of business and consistent with past practice;
(iv) make any capital expenditures in excess of $200,000 (individually or in the aggregate);
(v) declare, set aside, make, promise to pay, or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock;
(vi) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(vii) (v) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof in an amount in excess of $100,000; or (B) execute incur any employmentindebtedness for borrowed money or issue any debt securities or assume, deferred compensation guarantee or endorse, or otherwise become responsible for, the obligations of any person, or make any loans or advances, or intentionally grant any security interest in any of its assets;
(viii) suffer or incur any Lien, except for Permitted Liens, on its assets;
(ix) delay, accelerate or cancel, or waive any material right with respect to, any receivables or Indebtedness owed to it, or write off or make reserves against the same (other similar agreement than, in the case of the Company, in the ordinary course of business);
(x) terminate or allow to lapse any amendment to insurance policy protecting any such existing agreement) with any such director, officer, employee, agent or consultant of the Company or Company Subsidiaries, as applicable, assets, unless simultaneously with such termination or lapse, a replacement policy underwritten by an insurance company of nationally recognized standing having comparable deductions and providing coverage equal to or greater than the coverage under the terminated or lapsed policy for substantially similar premiums or less is in full force and effect;
(xi) institute, settle or agree to settle any action before any Governmental Authority, in each case in excess of $100,000 (exclusive of any amounts covered by insurance) or that imposes injunctive or other non-monetary relief on such party;
(xii) change its principal place of business or jurisdiction of organization;
(xiii) enter into any transaction with or distribute or advance any material assets or property to any of its Affiliates, other than the payment of salary and benefits in the ordinary course;
(xiv) fail to duly observe and conform to any applicable Laws and orders;
(xv) take any action where such action could reasonably be expected to prevent or impede the Transactions from qualifying for the Intended Tax Treatment;
(xvi) other than as required by Law or pursuant to the terms of an agreement entered into prior to the date of this Agreement and reflected on Schedule 4.11(a) of the Company Disclosure Schedules, grant any severance or termination pay to, any director or officer of the Company or of any Company Subsidiary;
(xvii) adopt, other than at-will employment arrangements entered into amend, and/or terminate any Plan except as may be required by applicable Law, is necessary in order to consummate the Transactions, or health and welfare plan renewals in the ordinary course of business that are consistent in cost and consistent benefits provided previously;
(xviii) make any changes with respect to accounting policies or procedures, other than as required by GAAP;
(xix) make, change or revoke any material Tax election, adopt or change any accounting method concerning Taxes, change any Tax accounting period, amend a material Tax Return or settle or compromise any material United States federal, state, local or non-United States income Tax liability, fail to pay any material Tax when due (including estimated Taxes), enter into any Tax allocation, Tax sharing, Tax indemnity, Tax claim or other controversy relating to Taxes, surrender or forfeit any claim for a refund of Taxes, waive or extend the statute of limitations in respect of Taxes, or prepare any Tax Return in a manner inconsistent in any material aspect with past practice practices;
(xx) amend, or modify or consent to the termination (excluding any expiration in accordance with its terms) of any Material Contract or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of the Company’s or any Company Subsidiary’s material rights thereunder, in each case in a matter that are terminable at will and without material liability is adverse to the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance, termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of any current director, executive officer or, other than in the ordinary course of business consistent with past practice, non-officer employee, agent or consultant, of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, except as necessary to maintain Tax-qualified status or Tax-favored treatment, or (F) provide any material benefit to a current or former director, officer, employee, agent or consultant of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan.
(x) make any changes in its reporting for Taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any material Tax election; make any material change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any material 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 tax liability; waive any statute of limitations in respect of a material amount of Taxes or right to any extension of time with respect to a Tax assessment or deficiency;
(xi) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;
(xii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $500,000 in the aggregate, which are not reserved for or reflected on the balance sheet as of October 1, 2010 included in the Company Financial Statements or incurred since the date of such audited financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;
(xiii) make or commit to make capital expenditures in excess of $200,000 in the aggregate;
(xiv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Company or any Company Subsidiary, from engaging or competing in any material line of business in which it is currently engaged or in any geographic area material to their respective business and operations;
(xv) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or materially modify, materially amend, terminate or fail to exercise any right to renew any lease or sublease of real property, except for: (x) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; and (y) a renewal of an existing lease or sublease in the ordinary course of business consistent with past practice;
(xvi) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), other than (x) Contracts entered into for sales, non-exclusive licenses or services in the ordinary course of business consistent with the past practice or (y) terminations upon the default of the other party thereto after notice and a failure of the other party to cure such default; (B) enter into any Contract with any third party that grants such third party any material rights upon a change of control of the Company or that provides for any diminution of material rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (C) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement in connection with the Company’s review of strategic alternatives;
(xvii) create any Company Subsidiary, other than the Company Subsidiaries that are already in existence as of the date of this Agreement;
(xviii) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, unless: (x) such policies are simultaneously replaced by a comparable amount of insurance coverage; (y) such policies expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced); or (z) changes to such policies are made except in the ordinary course of business;
(xixxxi) except as permitted under Section 5.1(b)(i) and Section 5.1(b)(ii), make any investment (by contribution of capital, property transfers, purchase of securities material alterations or otherwise) inimprovements to the Owned Real Property or the Leased Real Property, or loan amend any written or advance tooral agreements affecting the Owned Real Property or the Leased Real Property;
(xxii) intentionally permit any material item of Company IP to lapse or to be abandoned, any Personinvalidated, other than (A) travel and similar advances dedicated to its employeesthe public, or (B) disclaimed, or otherwise become unenforceable or fail to a direct perform or indirect wholly-owned Company Subsidiarymake any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in each and every material item of (A) and (B) Company IP, except in the ordinary course of business;
(xxiii) hire, or otherwise enter into any employment or consulting agreement or arrangement with, any person, (ii) grant any material increase in the compensation of any current or former officer or director, (iii) adopt any benefit plan for the benefit of any current or former officer or director, or (iv) materially amend any existing agreement with any current or former officer or director; or
(xxxxiv) agree enter into any formal or commit informal agreement or otherwise make a binding commitment to take do any of the actions precluded by Section 5.1(b). Notwithstanding the foregoing (but without limiting the foregoing), nothing in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the business or operations of the Company or the Company Subsidiaries at any time prior to the Effective Time. Prior to the Effective Time, the Company and the Company Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their own business and operations.
Appears in 1 contract
Samples: Business Combination Agreement (Goldenstone Acquisition Ltd.)
